ELEGRAM  SUPPLEMENT. 


"The  plain  issue  which  we  are  to  meet  is  indirect  versus  direct  taxation."— 

"  It  has  been  the  policy  of  the  Government  to  collect  the  principal  part  of  it* 
revenues  by  a  tax  upon  imports ;  and  no  change  in  thit  policy  w  denrable.  —frtn- 
dent  Cleveland  in  1886.  ,  .  _  , 

"For  mv  own  part,  as  a  Democrat,  I  prefer  indirect  taxation  and  tariff  reform 
above  direct  taxes  and  tariff  extinction.  I  prefer  taxing  foreign  products  rather 
than  taxing  home  products."— Da  aid  B.  Hill. 

"Against  such  a  scheme— unnecessary.  Ill-timed,  and  mischievous— suddenly 
sprung  upon  the  country  in  the  hour  of  its  distress,  un-Democratic  ™  lt8_na.turef 
and  socialistic  in  its  tendencies-I  enter  the  protest  of  the  people  of  the  State  of 
\i  w  York."— David  B.  Hill. 


SPEECH 


OF 


HON.  DAVID  B.  HILL, 

OF    NEW  YORK 


IN   THE 


SENATE  OF  THE  UNITED  STATES, 


AGAINST 


THE  INCOME-TAX  FEATURES  OF 
THE  WILSON  TARIFF  BILL. 

MONDAY,  APRIL  9,  1894. 


WASHINGTON. 
1894. 


to        Each       I'lirc/iaxer      of      the      ('iff/     Edition 
of  the  "  Ehnira   Tel  ey  ram"  April  IZtli,  18<>4. 


SPEECH 

OF 

HON.    DAVID    B.    HILL. 


The  Senate,  as  in  Committee  of  the  Whole,  having  under  consideration  the 
bill  (H.  R.  4864)  to  reduce  taxation,  to  provide  revenue  for  the  Government, 
and  for  other  purposes — 

Mr.  HILL  said: 

Mr.  PRESIDENT:  The  political  revolution  which  commenced 
in  1890  and  culminated  in  1892  was  an  emphatic  expression  of 
the  popular  will  in  behalf  of  certain  governmental  policies. 
Measures,  and  not  men.  were  largely  the  issues  involved  in 
that  movement.  Rightly  interpreted,  it  indicated  the  public 
sentiment  in  opposition  to  intrenchment  upon  the  reserved 
rights  of  the  States  through  odious  Federal  election  laws,  some 
proposed  and  others  then  existing;  it  voiced  the  general  demand 
for  a  discontinuance  of  the  unwise  and  indefensible  financial  sys- 
tem of  silver-bullion  purchases  by  the  Government,  instead  of 
the  coinage  contemplated  by  the  Constitution,  a  system  equally 
a  hindrance  to  the  return  to  bimetallism  as  well  as  a  menace  to 
a  sound  and  stable  currency;  it  manifested  the  desire  for  a  bet- 
ter administration  ofpublic  affairs,  greater  economy  in  govern- 
mental expenditures,  and  the  exaction  of  higher  official  stand- 
ards in  the  execution  of  public  trusts;  it  demanded  a  more  safe, 
dignified,  and  consistent  foreign  policy;  and  it  condemned  that 
abuse  or  perversion  of  the  taxing  power  of  the  Government  which 
is  known  as  the  policy  of  protection  "  for  protection's  sake  alone," 
and  declared  in  favor  of  a  tariff  for  revenue. 

Invested  with  the  responsibility  of  government,  the  prompt 
enforcement  of  these  policies  devolved  upon  the  party  in  power. 
The  wisdom  of  its  action  in  discharging  the  duties  thus  assigned 
it  by  the  suffrages  of  the  people,  may  at  least  be  partially  con- 
ceded, even  by  its  opponents. 

OUB  FOREIGN  POLICY. 

It  is  not  denied  that  some  mistakes  have  occurred.  Our  for- 
eign policy,  especially  that  relating  to  Hawaii,  it  must  be  ad- 
mitted, has  not  met  the  expectations  of  the  people.  A  sense  of 
humiliation  prevailed  when  the  project  for  the  restoration  of  a 
deposed  monarchy  was  unfolded  by  the  Administration,  and 
gratification  ensued  when  its  abandonment  or  failure  was  re- 
luctantly announced,  influenced  largely  by  an  aroused  public 
sentiment. 

That  unfortunate  contemplated  policy  was  a  blunder,  and  a 
blunder  is  sometimes  worse  than  a  crime.  It  was,  however,  the 
natural  consequence  which  might  well  have  been  anticipated 
from  that  other  mistake  in  placing  the  Department  of  State  in 
charge  of  a  Republican  stat3sman,  distinguished  and  estimable 

1228  3 


though  he  may  be,  whose  public  services  have  always  been 
identified  in  opposition  to  the  Democratic  party,  who  was  with- 
out sympathy  for  its  traditions  and  purposes,  and  whose  political 
convictions  upon  the  disputed  public  questions  of  the  day,  if 
changed  at  all,  are  carefully  concealed. 

It  is  to  be  regretted  that  the  President  should  not  have  been 
able  to  find  in  his  own  party  some  safe  and  honored  statesman  in 
whom  he  and  his  party  could  have  placed  confidence,  one  of  Dem- 
ocratic instincts  and  training,  whose  management  of  foreign 
affairs  would  have  reflected  credit  upon  the  country,  and  would 
have  avoided  the  promulgation  of  that  un-American  policy — 
a  departure  from  Democratic  precedents — which  was  sought  to 
be  forced  upon  an  unwilling  people.  In  this  view  of  the  situa- 
tion our  opponents  must  accept  some  share  of  the  responsibility 
for  the  blunders  committed  in  our  foreign  affairs. 

GOOD  GOVERNMENT. 

In  other  respects  the  present  administration  of  our  Govern- 
ment affords  scant  grounds  for  just  criticism. 

The  various  Departments  under  Democratic  control  are  rigidly 
enforcing  economy  and  the  pledges  to  the  people  are  being  rea- 
sonably fulfilled.  In  the  main  we  are  enjoying  an  era  of  good 
government. 

REPEAL  OF  FEDERAL  ELECTION  LAW. 

That  last  relic  of  post  bellum  legislation  known  as  the  Federal 
election  law  has  been  repealed  by  the  present  Congress,  thus 
promptly  carrying  out  one  of  the  important  promises  of  the 
Chicago  platform.  The  power  to  control  all  their  elections 
without  Federal  interference  or  dictation,  which  the  States  al- 
ways enjoyed  from  the  foundation  of  the  Government  down  to 
18".  1,  has  been  restored  to  them.  It  is  a  triumph  for  the  just 
doctrine  of  State  rights,  under  constitutional  limitations:  it  is  a 
tribute  to  the  unseltishness  and  patriotism  of  the  Democratic 
party,  which,  discarding  the  patronage  incident  to  the  enforce- 
ment of  this  law,  and  insured  to  it  by  at  least  three  more  years 
control  of  the  Federal  administration,  unhesitatingly  asserts  its 
devotion  to  a  principle,  and  thereby  relieves  the  people  at  once 
from  further  unnecessary  annoyances,  useless  offices,  and  prodi- 
gal expenditures. 

REPEAL  OP  THE  SHERMAN  LAW. 

The  repeal  of  the  Sherman  silver  bullion  purchase  law  within 
the  first  eight  months  after  its  ad  vent  to  power  marked  the  ful- 
fillment of  another  pledge  by  tbe  Democratic  party.  It  evi- 
denced our  sincerity  as  well  as  prudence.  It  met  the  just  de- 
mands of  public  sentiment.  While  there  were  honest  and  re- 
spectful differences  of  opinion  among  many  good  Democrats 
here  and  elsewhere  as  to  what  other  or  further  legislation  ought 
to  take  the  place  of  the  repealed  law,  or  to  precede,  accompany, 
or  follow  such  repeal,  there  were  never  any  substantial  differ- 
ences as  to  the  inadequate,  illogical,  and  indefensible  character 
of  the  Sherman  law  itself  and  the  desirability  of  the  redemption 
of  the  party  pledge  for  its  abolition. 

That  result  has  been  accomplished.  Whether  that  high  de- 
gree of  prosperity  lias  ensued  from  such  action  which  some  of 
our  officials  anticipated  and  others  predicted  is  another  and  a 
different  question,  not  now  necessary  to  be  considered.  It 
is  sufficient  that  we  have  speedily  removed  the  objectionable 
legislation  which  our  opponents  had  fastsned  upon  the  country. 


REVENUE  REFORM. 

The  duty  which  now  especially  confronts  us  is  the  revision  of 
the  sum  and  methods  of  Federal  taxation,  consequent  upon  a 
transfer  of  the  political  control  of  the  Federal  Government 
from  the  custody  where  it  had  been  lodged  for  thirty-two  years. 

That  revision  should  be  approached  with  circumspection,  and 
with  a  realizing  sense  of  the  changed  condition  of  the  country 
since  1887  and  1890. 

An  extreme  reduction  of  tariff  duties  at  a  time  when  the  Treas- 
ury was  swollen  with  a  surplus  of  a  hundred  million  dollars, 
when  the  country  was  reasonably  prosperous,  when  all  our  in- 
dustries were  in  motion,  and  all  our  workingmen  were  employed, 
assumes  a  different  aspect  and  presents  a  different  question 
when  proposed  now  with  a  large  and  growing  Treasury  deficit, 
instead  of  a  surplus,  staring  us  in  the  face,  with  our  industries 
paralyzed,  our  manufactories  closed,  our  workingmen  idle,  and 
following-  upon  the  heels  of  one  of  the  most  disastrous  financial 
panics  in  our  history. 

What  was  safe  and  prudent  and  wise  then  it  would  be  crimi- 
nal folly  to  attempt  now. 

THE  RECENT  MONETARY  PANIC. 

A  month  prior  to  his  inauguration  the  President  was  fore- 
warned of  the  approaching  monetary  panic.  He  convened  Con- 
gress six  months  later,  when  the  panic  was  subsiding  which 
should  have  been  averted. 

It  is  feared  that  this  Congress  does  not  keenly  appreciate  the 
awful  devastation  which  the  financial  cyclone  of  last  summer  has 
inflicted  upon  the  business  interests  of  our  country.  It  has 
made  havoc  of  our  prosperity,  private  and  public.  It  has 
slaughtered  private  incomes.  It  has  paralyzed  private  indus- 
tries. It  has  forced  bankruptcies  without  precedent  in  number 
and  sum.  It  has  diminished  all  domestic  and  interstate  trade, 
until  a  fifth  of  our  railroad  mileage  is  in  the  hands  of  receivers, 
and  all  our  banks  are  gorged  with  money  unemployed.  It  has 
struck  down  by  hundreds  the  captains  of  our  industry  who  have 
been  wont  to  organize  profitable  enterprises,  borrow  capital,  and 
lead  the  great  army  of  labor. 

The  past  savings  of  our  skilled  workmen  are  drawn  down. 
They  think  themselves  lucky  to  get  half-time  employment  in 
these  dark  days:  and  less  skilled  laborers  by  the  hundred  thou- 
sand are  suffering  hunger,  willing  but  unable  to  earn  their  daily 
bread.  It  is  heartbreaking  as  a  pestilence. 

NO  TIME  FOR  PARTISANSHIP. 

This  is  ho  time  for  partisan  reproaches,  however  just.  This 
is  no  time  for  Democrats  to  say  to  Republicans,  "  Your  bad  laws 
did  it."  This  is  no  time  for  Republicans  to  say  to  Democrats, 
•'Your  remedies  would  increase  trouble."  It  is  a  time  to  fling1 
partisanship  to  the  winds  if  that  will  speed  the  deliverance  of 
our  fellow-countrymen  and  revive  our  prostrate  business  inter- 
ests. 

This  Senate  is  nearly  equally  politically  divided,  and  it  is  ap- 
parent that  if  prompt  remedial  legislation  is  expected,  then  rad- 
icalism in  any  direction  must  be  discarded.  The  critical  situa- 
tion demands  wise  and  conservative  action  speedily  secured. 
The  extreme  features  of  the.  McKinley  bill  must  be  eradicated 
in  obedience  to  the  people's  mandate,  but  patriotism  alike  de- 

1228 


6 

mands  that  extremes  in  the  opposite   direction  must  also  be 
avoided. 

On  the  4th  of  March,  1893,  the  President  became  vested  with 
exclusive  power  to  convene  Congress  earlier  than  the  law  day, 
for  the  purpose  reaffirmed  in  his  election.  He  decided  to  pro- 
long the  operation  of  the  McKinley  tariff  for  at  least  another 
year.  The  delay  thus  imposed  upon  the  people's  reforming  zeal 
it  is  vain  to  regret.  In  the  mean  time  the  monetary  p-mic  un- 
fortunately precipitated  upon  us  has  not  only  made  havoc  of  our 
private  industries,  but  has  dried  up  the  public  revenues. 

THE  TREASURY  DEFICIT. 

The  size  of  the  Treasury  deficit  at  the  close  of  the  current  fis- 
cal year  has  twice  been  estimated  by  the  Secretary  of  the  Treas- 
ury. 

On  the  19th  of  December  he  took  its  measure.  On  the  15th 
of  January  he  took  its  measure,  the  measure  of  the  same  deficit, 
to  accrue  on  the  30th  of  June,  1894. 

These  two  measures  of  the  same  thing,  taken  twenty-seven 
days  apart,  are  not  perfectly  identical.  In  his  annual  report 
the  Secretary  of  the  Treasury  in  formed  Congress  of  a  deficit  for 
the  current  fiscal  year  of  $28,000,000. 

A  short  month  later,  in  his  letter  to  the  chairman  of  the  Sen- 
ate Finance  Committee,  the  same  Secretary  of  the  Treasury 
finds  the  same  deficit  to  be  $78,000,00.). 

It  may  be  unjust  to  the  Secretary  of  the  Treasury,  as  well  as 
absurd  in  itself,  to  assume  that  suggestions  in  his  annual  report 
made  when  he  thought  the  deficit  of  the  current  fiscal  year  to  be 
$28,000,OJO  stand  good  after  his  discovery  a  month  later  that  the 
size  of  the  deficit  is  $78,000,000. 

The  same  observation  would  apply  to  the  President's  message 
last  December  4,  dealing  as  he  said  with  ''existing  conditions," 
which  in  fact  have  ceased  to  «xist,  and  prefiguring  a  bill  • '  on 
the  lines  herein  suggested  "  (to  wit,  in  his  message),  warranted 
by  him  "  to  produce  sufficient  revenue  to  meet  the  needs  of  the 
Government,''  when  those  needs  were  underestimated  350,000,- 
000.  Yet  the  Wilson  bill,  framed  originally  upon  the  theory  sug- 
gested by  these  high  officials  in  their  annual  communications  to 
Congress,  underwent  no  material  change  during  its  progress 
through  the  House,  notwithstanding  the  altered  situation.  The 
theory  survived  its  conditions. 

In  the  face  of  the  prostration  of  private  industries,  and  in  the 
presence  of  such  a  paralysis  of  all  general  business  as  the  Treas- 
ury deficit  attests  and  prolongs,  this  bill  as  framed  by  its  authors 
and  as  passed  by  the  House  sought  to  double  the  deficit  by  dis- 
carding customs  revenue  and  to  fill  the  void  with  an  income  tax. 

THE  PROTEST  OF  NEW  YORK. 

Against  such  a  scheme — unnecessary,  ill-timed,  and  mischiev- 
ous— suddenly  sprung  upon  the  country  in  the  hour  of  its  dis- 
tress, un-Democratic  in  its  nature  and  socialistic  in  its  tenden- 
cies—I enter  the  protest  of  the  people  of  the  State  of  New  York. 
They  utterly  dissent  from  any  proposal  to  get  revenue  for  the 
General  Government  by  taxing  incomes.  Their  dissent  is  prac- 
tically unanimous  and  altogether  implacable. 

Neither  am  I  satisfied  that  the  people  of  the  country  agree 
•with  the  President  in  desiring  the  undebated  change,  sudden 
reversal,  and  complete  transformation  in  the  character  of  our 
Federal  taxation,  from  indirect  to  direct,  involved  in  the  pro- 

1228 


posed  plan  to  establish  a  sort  of  taxation  not  now  championed  hy 
either  of  the  parties  who  would  have  to  administer  it;  by  all  par- 
ties for  three-fourths  of  a  century  justly  believed  to  be  inhibited: 
then  after  trial  in  the  war  stress,  denounced  by  one  party  and 
discarded  by  the  other  party;  and  found  odious  throughout  the 
Northern  States  without  distinction  of  party. 

NOT  RECOMMENDED  BY  THB   PRESIDENT. 

The  recommendation  in  the  President's  annual  message  is 
cited  in  justification  of  the  proposed  tax.  It  is  as  follows: 

A  measure  has  bean  prepared  by  the  appropriate  Congressional  commit- 
tee embodying  tariff  reform  on  the  lines  herein  suggested  which  will  be 
promptly  submitted  for  legislative  action.  *  *  *  The  committee  after  full 
consideration  *  *  *  have  wisely  embraced  in  their  plan  a  few  additional 
internal-revenue  taxes,  including  a  small  tax  upon  incomes  derived  from  cer- 
tain corporate  investments.  »  *  *  In  my  great  desire  for  the  success  of  this 
measure  I  can  not  restrain  the  suggestion,  etc. 

It  will  strike  the  thoughtful  observer  familiar  with  the  history 
of  the  Government  as  a  strange  and  unusual  procedure  that  the 
President  of  the  United  States  should  seriously  inform  Congress 
of  what  one  of  its  own  committees  has  been  doing  in  the  prepa- 
ration of  a  bill.  It  might  be  safely  assumed  that  Congress 
already  had  auch  information  unless  the  bill  had  been  prepared 
in  the  executive  department  and  had  been  submitted  to  the 
committee  concurrently  with  the  transmission  of  the  message 
to  Congress.  In  these  latter  days  the  distinctions  between  the 
functions  and  prerogatives  of  the  executive  department  on  the 
one  hand  and  the  legislative  department  on  the  other  do  not 
seem  to  be  always  observed.  The  truth  is  that  the  first  infor- 
mation which  Congress  had  of  the  alleged  details  of  the  pro- 
posed bill  was  in  the  message  itself. 

But  the  strangest  part  of  this  unprecedented  proceeding  was 
that  in  fact  at  the  very  date  of  the  message,  to  wit,  December 
4,  1893,  neither  the  full  Committee  of  Ways  and  Means  nor  the 
Democratic  members  thereof  had  agreed  upon  any  income  tax 
or  upon  other  internal  taxation.  The  President's  information 
was  therefore  inaccurate  as  well  as  premature.  This  awkward 
situation  was  not  improved  by  the  President's  expression  of  his 
"  desire  for  the  success  of  this  measure,"  being  a  measure  not  yet 
perfected,  a  bill  in  an  inchoate  state. 

But  aside  from  any  question  of  impropriety  involved  in  the 
recommendation  of  a  particular  measure  or  of  an  incomplete 
measure,  instead  of  a  general  recommendation  of  tariff  reform, 
leaving  details  to  the  discretion  of  Congress,  and  while  conced- 
ing that  the  President  in  the  first  suggestion  of  a  limited  income 
tax  injected  the  poison  which  has  now  spread  until  it  has  de- 
veloped into  a  general  income  tax,  nevertheless  the  latter  scheme 
can  not  find  any  real  justification  in  the  President's  message. 

He  does  not  recommend  a  general  income  tax  upon  all  the  in- 
come of  individuals,  but  only  a  tax  upon  such  limited  income  as 
may  be  "  derived  from  certain  corporate  investments." 

NEITHER  BY  SECRETARY  CARLISLE. 

Secretary  Carlisle  in  his  annual  report  is  equally  guarded  and 
insists  upon  the  same  limitation.  His  report  assumed  that  there 
was  no  possibility  of  the  adoption  of  a  general  income  tax  such 
as  formerly  existed,  and  while  apparently  conceding  the  odious 
and  inquisitorial  character  of  such  tax  and  its  liability  to  eva- 

1228 


8 

sion,  he  defends  a  limited  tax  upon  incomes  derived  from  corpo- 
rate investments,  upon  the  plausible  ground  that — 

The  assessments  or  returns  need  not  be  based  upon  Information  extorted 
by  the  law  from  the  persons  charged  with  their  paym  ent,  but  upon  the  public 
ri'i-on/s  and  the  regular  and  authentic  accounts  of  the  corporations  and  companies 
in  which  the  investments  have  been  made;  and  they  hare  the  additional 
merit  of  being  imposed  entirely  upon  that  part  of  the  citizen's  income  which 
is  not  earned  by  fits  labor  or  xkill,  but  which  in  the  cases  of  legacies  and  suc- 
cessions, is  acquired  by  mere  operation  of  law,  or  by  gratuitious  bequests, 
and  in  the  case  of  incomes  from  Investments  in  corporations  and  joint  stock 
companies,  by  the  simple  earning  capacity  of  his  capital  as  such,  without 
pernonal  effort  on  his  part. 

Yet  disregarding  or  exceeding  the  recommendations  of  the 
President  and  the  Secretary  of  the  Treasury  this  bill  proposes 
to  tax  all  the  income  of  an  individual,  whether  ''  earned  by  his 
labor  or  skill,"  or  otherwise,  and  to  obtain  the  necessary  infor- 
mation not  from  an  inspection  of  public  records,  but  from  an  in 
vestigation  of  all  his  private  books  and  papers. 

A  Federal  income  tax,  ;vhether  limited  as  suggested  by  th« 
President  and  the  Secretary  of  the  Treasury  or  general,  as  pro- 
vided in  this  bill,  is  equally  objectionable. 

THE  "FRANCHISE"  ARGUMENT. 

The  argument  that  a  Federal  tax  upon  incomes  derived  from 
corporate  investments  may  with  propriety  be  imposed,  because 
corporations  are  invested  by  law  with  valuable  franchises  not 
enjoyed  by  the  individual  citizen,  would  have  more  weight  if 
suchfranchises  were  usually  granted  by  Federal  instead  of  Stat.^ 
authority.  The  reverse  is  just  the  fact,  however,  and  while  State 
authorities  might  with  much  reason  upon  such  ground  tax  the 
franchises  as  well  as  the  earnings  and  dividends  of  such  corpora- 
tions for  the  support  of  their  State  governments,  the  Federal 
Government  has  no  particular  standing  or  equities  for  such  pur- 
pose. It  is  immaterial  to  the  General  Government  whether  ibis 
an  individual  or  a  corporation  that  is  in  receipt  of  income,  as 
the  right  or  propriety  of  taxing  such  income  is  no  greater  in  one 
case  than  in  the  other,  except  in  the  rare  instances  where  the 
corporation  may  have  received  its  charter  through  national 
favor.  This  bill  taxes  both  individual  and  corporate  incomes 
alike. 

In  New  York  and  in  several  other  States  a  "franchise  ''  tax 
is  imposed  upon  the  earnings  of  certain  corporations,  and  an 
income  tax,  such  as  is  proposed  in  this  measure,  would  dupli- 
cate the  taxation  already  imposed  and  compel  the  States  to  aban- 
don their  State  taxation.  This  is  a  most  important  and  serious 
objection  to  this  feature  of  the  bill. 

In  New  York  alone  there  was  last  year  received  from  State 
taxation  on  the  capital  and  earnings  of  corporations  the  sum  of 
$1,1)011,047.45,  excluding,  of  course,  the  taxation  of  their  real  es- 
tate and  personal  property,  and  any  local  taxation.  In  the  same 
State  there  was  also  received  last  year  the  sum  of  $3,071,087.09 
from  the  State  inheritance  and  gift  tax.  These  taxes  from 
which  the  State  derives  these  enormous  sums  could  not  well  be 
maintained  or  collected  without  the  most  extreme  hardship  in 
the  event  of  the  enactment  of  this  bill,  which  taxes  the  same 
sources  '1  per  cent. 

It  follows  that  the  State  taxes  would  necessarily  have  to  be 
abandoned,  and  the  amounts  heretofore  received  would  have  to 
be  collected  from  real  estate  or  in  other  ways.  New  York's 
interest  in  opposition  to  this  feature  of  the  proposed  bill  can 
thus  be  appreciated. 


THE  INJUSTICE  NOT  MITIGATED. 

Neither  is  the  injustice  of  the  proposed  corporate  tax  miti- 
gated by  the  fact  that  it  is  against  corporations  rather  than 
against  individuals,  because,  although  in  form  imposed  upon 
the  corporations,  the  amount  thereof  is  deducted  from  the  divi- 
dends paid  to  the  individual  stockho'ders,  and  it  is  virtually  a 
tax  upon  individuals,  for  all  practical  purposes. 

The  individual  stockholders  are  not  necessarily  the  rich,  but 
they  usually  include  all  classes,  and  frequently  among  them  are 
found  widows,  orphans,  trustees,  and  executors,  and  persons  of 
ordinary  means  who  have  invested  their  all  in  these  corporate 
securities,  relying  upon  their  dividends  for  their  support. 

If  the  suggestion  for  the  taxation  of  incomes  "  derived  from 
corporate  investments ''  was  largely  based  for  its  acceptability 
to  the  people  upon  the  well  understood  popular  prejudice 
against  corporations,  the  proposition  has  a  very  weak  moral 
support,  because  after  all  it  is  the  individual  stockholders  whose 
dividends  would  be  diminished,  and  who  would  be  seriously  in- 
jured by  the  proposed  tax. 

A  Federal  tax  upon  the  earnings  or  dividends  of  corporations 
is  no  more  defensible  than  such  tax  upon  the  earnings  of  indi- 
viduals. 

THE  TAX  TOO   LARGE. 

This  bill  neither  follows  the  recommend*ations  of  the  Presi- 
dent and  the  Secretary  of  the  Treasury  as  to  the  kind  of  income 
tax  desired  nor  as  to  the  amount  or  rate  of  the  tax  itself. 

The  President  preferring  not  to  be  specific,  but  cautious,  rec- 
ommended simply  "a  small  tax  upon  incomes."  The  Secretary 
suggested  a  tax  of  1  per  cent.  The  bill  repudiates  both  sugges- 
tions and  adopts  a  tax  of  2  per  cent  on  all  incomes  over  $4,IH,C, 
no  matter  how  large  the  excess  may  be. 

AN  INDEFENSIBLE  EXEMPTION. 

This  exemption  of  so  much  as  $4,00(rnecessarily  leads  to  con- 
siderable criticism.  If  an  income  tax  is  justifiable  at  all.  it  is 
difficult  upon  theory  to  defend  any  exemptions,  at  least  of  any 
material  amount.  Exemptions  are  merely  a  matter  of  govern- 
mental charity  or  favor,  and  not  a  matter  of  strict  right;  and 
being  in  derogation  of  a  general  principle,  they  should  not  be 
unreasonably  enlarged.  If  incomes  are  properly  taxable,  then 
all  incomes  should  be  taxed,  of  whatever  amount,  taxed  propor- 
tionally, without  favoritism  to  any  individual  or  class.  The  man 
of  moderate  means  should  pay  as  well  as  the  man  of  wealth,  both 
according  to  what  income  they  actually  receive,  no  more  and  no 
less,  and  no  matter  what  the  amount  may  be,  great  or  small. 
This  must  be  the  correct  theory  of  an  income  tax,  if  any  it  has. 

Such  a  tax  being  largely  of  foreign  origin  and  having  been 
imported  into  this  country  and  injected  into  this  bill,  it  might 
be  expected  that  the  exemptions  would  follow  foreign  prece- 
dents. Prussia  only  tolerates  an  exemption  of  $22.~>.  In  Ger- 
many the  exemption  varies  from  $70  to  $t>00.  In  Denmark  it  is 
$21").  and  in  Austria,  $113,  and  in  England  $150.  Yet  here  the 
proposed  exemption  is  to  be  the  liberal  sum  of  $4,000,  a  figure 
for  which  there  is  no  precedent  anywhere  in  the  world.  So 
large  an  exemption  necessarily  creates  a  numerous  class  receiv- 
ing a  respectable  income,  twice  as  much  as  is  ordinarily  neces- 
sary to  furnish  a  fair  living,  who  pay  no  tix  whatever.  This 

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necessarily  creates  a  privileged  or  exempted  class  on  the  one 
band  as  against  a  taxpaying  class  on  the  other. 

When  real  estate  is  taxed  all  that  the  individual  owns  is  taxed 
without  the  exemption  of  any  part.  So  with  personal  property 
aside  from  a  few  unimportant  exceptions.  So  with  the  earnings 
of  corporations — all  are  taxed,  or  none  at  all.  The  same  principle 
applies  to  the  oleomargarine  and  the  State-bank  tax — there  are 
no  exemptions  tolerated.  But  in  the  strenuous  effort  to  popular- 
ize this  war  tax  in  time  of  peace  every  just  principle  of  taxation 
is  either  violated  or  unreasonably  extended. 

DAVID  A.   WELLS'S  VIEWS. 

The  Hon.  David  A.  Wells,  of  Connecticut,  contributes  an  able 
and  interesting  article  in  the  Forum  of  last  month  in  opposition 
to  an  income  tax.  His  attitude  upon  this  question  may  create  a 
suspicion  of  his  loyalty  to  the  cause  of  tariff  reform  in  the  minds 
of  a  select  coterie  of  overzealous  professional  reformers  with 
which  the  country  is  afflicted,  but  not  in  the  minds  of  the  Ameri- 
can people.  Mr.  Wells  was  a  sincere  and  radical  friend  of  reve- 
nue reform  many  long  years  before  any  politician  or  official 
selfishly  sought  to  monopolize  it  as  his  own  particular  hobby, 
and  his  sentiments  will  carry  much  weight  with  thinking  men. 
Upon  the  precise  point  which  I  am  discussing,  he  writes  as  fol- 
lows: 

The  authors  of  the  proposed  income  tax  now  before  Congress  especially 
proclaim  that  the  chief  object  sought  by  them  in  this  measure  is  to  transfer 
the  burdens  of  the  State  from  the  shoulders  of  the  poor  to  those  of  the  rich. 
It  is.  therefore,  interesting  to  note  where  they  propose  to  draw  the  line  in 
respect  to  charity  and  as  to  the  amount  of  property  the  possession  or  en- 
joyment of  which,  in  their  opinion,  constitutes  riches. 

If  we  assume  5  per  cent  as  about  the  present  annual  average  profit  on 
money,  land,  or  other  property  in  the  United  States  over  and  above  all 
charges  and  taxes,  then  an  exemption  of  $4,000,  in  an  assessment  under  an 
income  tax.  would  represent  an  accumulation,  or  business,  or  profession,  of 
the  value  of  $80.000.  If  we  take  the  rate  at  which  the  United  States  can  bor- 
row money,  namely.  3  per  cent,  then  an  exemption  of  $4,000  would  represent 
an  accumulation  of  a  citizeikin vested  in  United  States  securities  of  $133,333. 
And  according  to  any  fair  interpretation  of  the  action  of  the  committee 
reporting  a  $4,000  exemption,  a  citizen  who  is  worth  less  than  .JSO.OOO  of  ordi- 
nary property  yielding  income,  or  $133.003  of  property  invested  in  United 
States  bonds,  is  a  legitimate  object  of  national  charity;  the  above  sums  rep- 
resenting the  dividing  line  in  the  United  States  between  those  who  are  en- 
titled to  be  regarded  as  poor  and  those  who  are  entitled  to  be  considered 
rich.  Such  an  assumption  finds  no  precedent  in  fiscal  history.  Such  an  ex- 
emption is  unwarranted  favoritism  to  nine-tenths  of  the  well-to-do  people 
of  the  United  States,  who  are  abundantly  able  to  pay  any  just  proportion  of 
The  taxes  which  the  Government  finds  it  necessary  to  impose  for  its  support. 

No  man  is  a  freeman  whose  industry  and  capital  are  subject  to  exaction 
and  from  which  his  immediate  competitors  are  entirely  exempt.  Equality 
of  taxation  of  all  persons  and  property  brought  into  open  competition  un- 
der like  circumstances  is  necessary  to  proJuce  equality  of  condition  for  all, 
in  all  production,  and  in  all  the  enjoyments  of  life,  liberty,  and  property. 
And  government,  whatever  name  it  may  assume,  is  a  despotism,  and  com- 
mits acts  of  flagrant  spoliation,  if  it  grants  exemption  or  exacts  a  greater 
or  less  rate  of  tax  from  one  man  than  from  another  man,  on  account  of  the 
one  owning  or  having  in  his  possession  more  or  less  of  the  same  class  of 
property  which  is  subject  to  the  tax. 

If  it  were  proposed  to  levy  a  tax  of  2  per  cent  'on  annual  incomes  below 
$4,000  in  amount  and  exempt  all  incomes  above  this  su.n.  the  unequal 
and  discriminating  character  of  the  exemption  would  be  at  once  apparent: 
and  yet  an  income  tax  exempting  all  incomes  below  $4.030  is  equally  unjust 
and  discriminating.  In  either  case  the  exemption  can  not  be  founded  or  de- 
fended on  any  sound  principles  of  free  constitutional  government,  and  is 
fimplv  a  manifestation  of  tyrannical  power  under  whatever  form  of  gt  >vern- 
ment  it  may  be  enforced.  The  great  republican  principle  of  equality  before 
the  law  and  constitutional  law  itself  alike  preclude  any  exemption  of  in- 
come derived  from  like  property. 

I  can  add  nothing  to  the  force  of  these  observations. 

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IT  IS  INQUISITORIAL. 

An  income  tax  is  objectionable  because  from  its  very  nature  it 
must  be  inquisitorial  in  its  imposition  and  collection.  The  senior 
Senator  from  Indiana  [Mr.  VOORHEES]  calls  this  allegation  a 
"noisy  and  resounding  charge."  Let  me  tell  him  that  it  is  not 
half  so  noisy  as  the  constant  vituperations  which  we  hear  on 
every  hand  from  blatant  demagogues  who  are  abroad  in  the  land 
loudly  inveighing  against  the  wealth  of  the  country  and  impu- 
dently demanding  its  confiscation  through  every  means  which 
their  "devilish  ingenuity  can  invent. 

The  charge  is  indeed  a ' '  resounding  "  one !  It  was  heard  years 
ago  in  France  against  unjust  and  arbitrary  taxes  when  Talley- 
rand and  others  declared  that  '•  every  system  of  taxation  which 
necessitates  personal  and  arbitrary  inquisitions  for  its  execu- 
tion is  inconsistent  with  the  maintenance  of  a  free  people."  The 
charge  has '  •  resounded  "  all  over  the  wdrld  whenever  despotisms 
have  attempted  to  enforce  similar  taxes  to  the  annoyance  and 
detriment  of  the  people.  The  charge  that  this  tax  is  inquisito- 
rial is  scarcely  denied  even  by  the  distinguished  Senator  from 
Indiana,  and  is  only  attempted  to  be  palliated  by  the  pretense 
that  other  taxes  are  equally  so;  but  there  is  no  foundation  even 
for  this  pretense. 

Real  estate  is  open  and  aboveboard:  its  value  is  easily  ascer- 
tainable,  and  its  taxation  presents  no  offensive  features.  Under 
ordinary  laws  the  assessors  have  no  right  to  enter  and  ransack 
your  premises.  Your  home  is  your  castle  and  it  is  sacred  from 
intrusion.  The  taxation  of  personal  property  presents  difficul- 
ties, of  course,  but  visible  personalty  may  be  readily  reached 
without  annoyance  to  the  owner.  The  taxation  of  corporate 
property  is  easily  effected  by  general  inquiry  and  an  inspection 
of  public  or  other  records  usually  accessible. 

The  fact  that  in  a  few  States  of  the  Union  tax  laws  have  been 
adopted  which  unnecessarily  pry  into  the  taxpayers'  private  af- 
fairs and  are  unusually  harsh  and  offensive  furnishes  no  argu- 
ment why  they  should  be  selected  as  models  for  the  whole  United 
States.  They  are  exceptional  in  feheir  character  and  should  not 
be  followed. 

If  they  are  cited  to  show  their  acceptability  to  the  people,  I 
might,  on  the  other  hand,  point  to  the  fact  that  income  taxes 
are  so  distasteful  that  they  have  been  tolerated  in  only  a  very 
limited  number  of  States. 

Neither  does  the  circumstance  that  the  Government  in  the 
collection  of  our  customs  duties  insists  upon  the  inspection  of 
the  baggage  of  passengers  entering  the  country,  in  order  to  pre- 
vent frauds  npon  the  revenue — and  sometimes  searches  their 
persons — afford  any  justification  for  the  enactment  of  an  income 
tax,  the  collection  of  which  must  largely  depend  upon  inquisi- 
torial proceedings.  One  procedure  is  necessary  and  unavoidable, 
the  other  is  not.  One  law  is  framed  principally  to  reach  for- 
eigners and  strangers  entering  the  country,  while  the  other 
applies  almost  entirely  to  our  own  citizens.  One  has  the  safe 
precedents  of  centuries  to  support  it,  the  other  is  the  modern  or 
at  least  the  bad  invention  of  monarchical  governments. 

A  municipality  has  the  right  to  compel  individual  vaccination 
in  the  interest  of  the  public  health,  but  this  reasonable  and  in- 
dispensable exercise  of  authority  would  afford  no  excuse  for  the 
establishment  of  an  elaborate  system  for  the  enforced  general 
attendance  of  public  physicians  upon  individual  citizens  and 

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12 

their  families.  There  is  reason  in  all  things,  and  one  necessary 
and  proper  encroachment  upon  the  absolute  personal  freedom 
of  the  citizen  should  not  be  made  the  pretext  for  other  and  more 
extensive  ones,  which  are  obnoxious  to  a  free  people  and  con- 
sistent only  with  despotism. 

ITS  BAD   FEATURES. 

This  bill  compels  the  taxpayer,  under  severe  pains  and  pen- 
alties, to  make  a  return  under  oath  of  his  income,  whereby  ho 
discloses  all  his  private  aff airs  and  business  to  the  agents  of  the 
Government:  and  if  intheopinion — the  mere  belief- — of  such  agents 
the  return  is  false,  fraudulent,  or  contains  any  misstatement. 
they  may  arbitrarily  summon  the  citizen  before  them  with  all 
his  books  and  papers,  and  compel  him  to  submit  to  examination 
under  oath.  They  may  question,  cross-examine,  and  annoy  him 
to  their  heart's  content.  There  is  no  limit  fixed  anywhere. 

The  hearing  is  conducted  in  secret:  there  is  no  tribunal  or 
judge  to  regulate  or  check  them:  no  one  to  prevent  improper, 
impertinent,  or  insulting  questions;  no  one  to  protect  the  wit- 
ness in  his  rights — he  refuses  to  answer  at  his  peril.  Neither  is 
that  all;  they  may  "enter  into  and  upon  his  premises,"  and  pre- 
sumably into  the  very  sanctity  of  his  home  to  obtain  '  •  from  their 
own  view,"  as  the  statute  says,  any  additional  information  they 
may  desire. 

All  this  is  to  be  tolerated  and  sanctioned  by  a  free  people  to 
enable  the  Government  in  time  of  peace  to  extort  from  a  limited 
class  engaged  in  laudable  occupations,  who,  by  reason  of  their 
good  fortune,  their  brains,  their  enterprise,  or  their  pluck,  have 
accumulated  a  little  more  of  this  world's  goods  than  their  fel- 
lows, when  other  and  ample  and  better  sources  of  revenue  are 
always  accessible.  The  provisions  of  this  bill  are  dangerous  in 
the  extreme.  What  temptations  they  offer;  of  what  abuses  they 
are  capable:  what  vast  powers  they  confer! 

These  officials  of  the  Government,  intrusted  with  these  enor- 
mous powers,  would  not  hold  their  positions  for  life  or  during 
good  beh  ivior  as  in  European  countries  where  income  taxes  are 
fostered,  but  they  would  be  partisans,  subservient  and  anxious 
to  please — removable  at  pleasure. 

What  opportunities  such  laws  and  such  officials  would  afford 
to  an  unscrupulous  administration  desiring  to  assail  and  injure 
its  political  adversaries  or  to  build  up  a  personal  faction  of  its 
own! 

This  bill  also  provides  for  the  official  supervision  of  the  busi- 
ness of  corporations  by  requiring  all  their  transactions  to  be 
spread  upon  their  books  and  to  be  open  to  the  inspection  at  all 
reasonable  times  of  "am/  internal-revenue  officer  or  agent." 
The  House  bill  sought  to  restrict  such  inspection  so  that  it 
should  only  be  had  whenever  necessary  for  the  purpose  of  veri- 
fying the  returns  made  by  such  corporations,  and  at  no  other 
time,  but  the  Finance  Committee,  presumably  under  the  lead 
of  the  Senator  from  Indi  ma  [Mr.  VOORHEES],  whose  zeal  in 
behalf  of  this  tax  seems  to  have  outrun  his  discretion,  have 
amended  the  House  bill  so  as  to  remove  all  such  restrictions 
and  to  place  the  books  of  such  corporations  absolutely  at  the 
disposal  of  the  officials  at  all  times. 

ITS  POWERS  WILL  BE  ABUSED. 

But  it  is  said  that  these  extraordinary  powers  and  privileges 
may  not  be  abused,  and  it  is  also  urged  that  the  provisions  pun- 


13 

ishing  by  a  fine  not  exceeding  $1,000,  or  by  imprisonment  not 
exceeding  a  year,  or  both,  at  the  discretion  "of  the  court,  any  offi- 
cial who  makes  public  any  information  obtained  by  him  in  the 
discharge  of  his  duties,  are  sufficient  to  prevent  disclosures  of 
the  citizen's  business  and  private  affairs. 

Experience  has  demonstrated  that  such  penal  provisions  af- 
ford little  protection  to  the  people.  There  are  statutes  which 
forbid  the  disclosure  of  the  contents  of  telegrams,  but  leaks  are 
constantly  discovered.  Grand  juries  are  sworn  to  secrecy,  but 
their  proceeding's  often  prematurely  reach  the  public  ear.  The 
executive  sessions  of  our  Senate  are  secret,  but  the  newspapers 
generally  manage  in  s  jme  mysterious  way  to  find  out  all  they 
ought  to  know. 

Our  post-office  officials  are  human  and  curious,  and  hence  se- 
vere statutes  do  not  prevent  frequent  complaints  of  the  opening 
of  letters.  It  is  evident  that  the  chief  reliance  of  the  citizen  for 
the  secrecy  of  his  business  and  private  affairs  must  be  upon  the 
absence  of  any  law,  no  matter  how  strict,  compelling  their  dis- 
closure to  any  one. 

The  people  of  this  country  nearly  everywhere  enjoy  the  priv- 
ilege of  a  secret  ballot,  but  they  would  regard  that  privilege  as 
abridged  and  that  secrecy  as  absolutely  destroyed  if  the  con- 
tents of  their  ballot  were  required  to  be  exhibited  to  the  inspec- 
tors, although  such  inspectors  were  sworn  to  secrecy  and  a  dis- 
closure were  made  a  penal  offense.  It  is  immaterial  to  me  how 
Senators,  unmindful  of  the  personal  rights  and  liberties  of  the 

Eeople.  may  regard  the  conceded  inquisitorial  features  of  this 
ill.     But  it  is  a  satisfaction  to  know  that  the  best  thought 
and  the  fairest  minds  of  the  nation  are  opposed  to  them. 

The  Supreme  Court  of  the  United  States,  in  the  case  of  Boyd 
us.  United  States  (116  U.  S.  Rep.,  631)  expressed  its  opinion  of 
similar  legislation  in  the  following  vigorous  language: 

Any  compulsory  discovery,  by  extorting  the  party's  oath  or  compelling 
the  production  of  his  private  books  and  papers  to  convict  him  of  a  crime  or 
to  forfeit  his  property,  is  contrary  to  the  principles  of  a  free  government. 

It  is  abhorrent  to  the  instincts  of  an  Englishman.  It  is  abhorrent  to  the 
instincts  of  an  American.  It  may  suit  the  purposes  of  despotic  power,  but 
it  cau  not  abide  the  pure  atmosphere  of  political  liberty  and  personal  free- 
dom. 

I  commend  these  patriotic  and  pertinent  utterances  to  the  at- 
tention of  the  apologists  for  this  bill. 

The  provisions  of  this  bill  violate  the  spirit  of  the  constitu- 
tional provision  which  declares  that  "  therig-ht  of  the  people  to 
be  secure  in  their  persons,  houses,  papers,  and  effects  against 
unreasonable  searches  and  seizures  shall  not  be  violated.' 

The  appliances  of  compulsory  examination  and  inspection 
which  the  bill  invokes  render  its  provisions  extremely  odious 
and  antagonize  the  citizens'  sacred  right  of  privacy.  The  re- 
cent experiences  in  South  Carolina  illustrate  the  difficulties 
often  attending  the  enforcement  of  an  unpopular  law. 

ELEMENTS  OF  INJUSTICE  AND  INEQUALITY. 

The  public  should  not  be  misled  into  the  belief  that  only  those 
whose  incomes  exceed  $4,000  are  affected  by  this  bill.  That  is 
a  mistaken  idea. 

In  the  first  place,  all  those  having  incomes  less  than  $4,000  but 
more  than  $3,500  are  put  to  the  annoyance  of  making  sworn  re- 
turns, and  they  neglect  it  at  their  peril.  (See  section  56. ) 

In  the  second  place,  it  may  reasonably  be  apprehended  that 

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14 

some  portion  of  the  tax  paid  will  reimburse  itself  by  an  increase 
of  rents  where  the  income  was  derived  from  that  source.  State 
taxes  upon  land  regulate  to  some  extent  the  amount  of  the  rent 
demanded  by  the  landlord.  So  poor  tenants  may  be  affected  in 
some  degree  as  well  as  rich  landlords.  The  bill  seriously  af- 
fects the  rights  and  interests,  as  they  have  been  heretofore  en- 
joyed, of  building  and  loan  associations  throughout  the  country 
incorporated  under  State  laws.  The  Senate  amendments  do  not 
cure  the  defects  complained  of. 

The  salaries  of  State,  county,  and  municipal  officers  are  ex- 
empt (necessarily  so.  as  is  alleged),  while  the  salaries  of  faithful 
employes  in  private  employment— their  next-door  neighbors 
perhaps— are  subject  to  the  tax. 

The  professional  man  will  feel  more  keenly  the  tax  upon  his 
salary  than  one  whose  income  is  derived  from  in  vested  property. 

At  every  point  there  is  an  element  of  injustice  and  inequality 
which  renders  an  income  tax  indefensible  except  as  a  war  tax. 
That  portion  of  the  act  which  provides  for  a  tax  upon  live- 
stock, wool,  butter,  cheese,  beef,  etc.,  and  general  productions 
from  real  estate. (i  less  the  amount  expended  in  the  purchase  or 
production  of  said  stock  or  produce,"  and  which  allows  "  neces- 
sary expenses  actually  incurred  in  carrying  on  any  business,  oc- 
cupation or  profession,"  to  be  deducted  in  estimating  the  income, 
opens  the  door  for  evasions,  virtual  frauds,  fictitious  or  extrav- 
agant expenses,  overcharges,  and  a  hundred  different  means 
whereby  the  income  will  be  reduced,  without  actual  fraud  or 
perjury,  and  there  is  no  practical  remedy.  The  enforcement  of 
the  law  will  descend  into  a  system  of  favoritism,  will  lead  to 
endless  litigations,  and  the  revenues  derived  will  be  disappoint- 
ing. 

IT  IS  UNDEMOCRATIC  AND  UNJUST. 

Let  me  inquire  whence  came  this  recent  and  unnecessary 
clamor  for  the  imposition  of  an  income  tax  as  the  policy  of  the 
Government?  Nothing  was  heard  in  its  behalf  on  the  part  of 
either  of  two  great  political  parties  in  the  campaign  of  1892. 
Neither  the  Republican  nor  Democratic  platform  proposed  any 
such  method  of  raising  revenues.  No  prominent  Democrat  or  Re- 
publican suggested  any  such  measure.  Its  approval  was  limited 
to  the  platform  of  the  newly  formed  Populist  party,  and  its  ad- 
vocacy was  restricted  to  Populist  orators. 

But  no  sooner  was  the  campaign  of  1892  ended  than  we  find  it 
seriously  proposed  by  a  Democratic  Congress  to  steal  the  thun- 
der of  the  Populist  party  by  adopting  one  of  its  principles.  1 
object  to  becoming  a  particeps  criminis  in  any  such  larceny.  I 
protest  against  the  Democratic  party  being  made  a  tail  to  the 
Populist  kite.  I  deny  the  right  of  a  Democratic  Congress  to 
make  new  principles  for  our  party  not  sanctioned  by  its  repre- 
sentatives in  national  convention  duly  assembled. 

We  must  look  in  vain  to  find  a  single  utterance  in  favor  of  the 
scheme  of  Federal  income  taxation  in  any  Democratic  national 
platform  from  the  organization  of  the  Government  down  to  the 
present  hour.  Yet  in  spite  of  this  record  this  scheme  has  been 
injected  into  a  revenue-tariff  bill  (so  called)  and  the  support  of 
the  measure  as  a  whole  is  sought  to  be  made  the  test  of  our 
Democracy.  For  one  I  repudiate  any  such  doctrine  and  decline 
to  recognize  any  such  test. 

The  Constitution  of  the  United  States  may  well  be  invoked  in 
this  discussion. 

1228 


15 

A  careful  perusal  of  that  instrument  shows  that  its  frame rs 
contemplated  that  the  revenues  of  the  Government  should  be 
mainly  derived  from  duties  upon  imports. 

It  is  true  that  the  power  to  impose  internal  taxes  and  direct 
taxes  was  conferred  upon  Congress,  together  with  the  power  to 
collect  import  duties,  yet  it  was  only  the  latter  field  of  taxation 
that  the  States  were  forbidden  to  encroach  upon. 

Article  I,  section  10,  subdivision  2,  of  the  Constitution,  pro- 
vides as  follows: 

No  State  shall,  without  the  consent  of  the  Congress,  lay  any  imposts  or 
duties  on  imports  or  exports.  *  *  * 

This  source  of  revenue  being  thus  expressly  and  exclusively 
reserved  for  the  General  Government,  while  all  other  sources 
were  permitted  to  remain  open  to  the  States,  it  indicates  the 
intention  of  our  early  statesmen  that  the  needs  of  the  Govern- 
ment should  be  or  were  expected  to  be  supplied  practically  from 
tariff  taxation  alone. 

From  that  sole  source  they  have  always  been  supplied  during 
all  Administrations  from  the  early  history  of  the  country,  save 
during  the  war  period,  with  the  addition,  however,  since  then 
of  internal  taxes  upon  liquors  and  tobacco  (and  one  or  two  minor 
articles  o  r  sources ) ,  which  for  exceptional  reasons,  apparent  to  all . 
have  been  approved  or  tolerated.  But  aside  from  these  excep- 
tions the  policy  of  the  Government  has  been  uniform  in  favor  of 
taxation  upon  imports  rather  than  internal  taxation  or  direct 
taxes,  aa  a  means  of  supplying  the  necessary  revenues. 

PRESIDENT  CLEVELAND  ON  RECORD. 

President  Cleveland  in  his  second  annual  message  in  1886  ap- 
proved this  course  in  the  following  language: 

It  has  been  the  policy  of  the  Government  to  collect  the  principal  part  of 
Its  revenues  by  a  tax  upon  imports:  and  no  change  in  this  policy  is  desirable. 

Yet  the  fact  can  not  be  disguised  that  notwithstanding  these 
accumulated  evidences  of  Democratic  sentiment,  the  authors  of 
this  bill  in  the  House  deliberately  set  themselves  at  work  to 
make  extreme  reductions,  unnecessary  changes,  and  violent  al- 
terations in  existing  tariff. rates — rates  not  warranted  by  exist- 
ing business  conditions  and  lower  than  in  the  Mills  bill — for  the 
very  purpose  of  creating  a  necessity  for  the  imposition  of  a  tax 
upon  incomes. 

DESIGNED  AS   A  PERMANENT  POLICY. 

This  proposed  tax  is  not  advocated  as  a  temporary  expedient: 
there  is  no  limitation  fixed  to  its  duration,  but  it  is  boldly  pro- 
posed as  a  permanent  policy  of  the  Government;  its  injustice  is 
vigorously  defended,  its  discriminations  are  heartily  approved, 
and  its  illy-concealed  sectionalism  is  unblushingly  excused. 

The  Ways  and  Means  Committee  of  the  House,  as  well  as  the 
House  itself  and  the  Senate  Finance  Committee,  refused  to  fix 
a  definite  term  for  the  continuance  of  this  tax. 

It  is  clear  that  it  was  not  designed  for  temporary  relief  merely . 
but  if  once  enacted  will  stand,  like  every  other  portion  of  the 
bill,  until  repealed. 

The  country  should  not  be  deceived  upon  this  subject,  nor  be 
misled  by  specious  promises  of  relief  not  contained  in  the  meas- 
ure itself,  nor  indulge  in  the  vain  hope  that  if  once  established 
the  clamor  for  its  continuance  will  soon  die  out.  The  character 
of  the  speeches  made  in  the  House  in  its  favor,  the  appeals  of 
that  portion  of  the  press  which  favor  it,  and  all  the  reasons 

1228 


16 

which  are  publicly  and  privately  urged  for  its  enactment,  pro- 
ceed upon  the  theory  that  it  ought  to  bscome  and  is  intended 
to  become  a  part  of  our  permanent  system  of  Federal  taxation. 
That  is  the  goal  for  which  its  friends  are  struggling,  and  they 
will  be  satislied  with  nothing  less. 

The  plain  issue  which  we  are  to  meet  is  indirect  versus  direct 
taxation. 

Mr.  Thomas  G.  Shearman,  of  Brooklyn,  a  theoretical  reformer 
and  an  intelligent  and  earnest  disciple  of  Mr.  Henry  George's 
single-tax  theory,  as  well  as  an  advocate  of  an  income  tax,  began 
his  able  address  before  the  Ways  and  Means  Committee  on  Oc- 
tober 16  last,  as  follows: 

It  is  high  time  that  some  form  of  practically  direct  taxation  should  be  re- 
sorted to  by  the  Federal  Government. 

It  should,  however,  be  stited  that  Mr.  Shearman  opposed  an 
individual  income  tax.  but  favored  the  taxation  of  incomes  from 
certain  corporate  investments.  I  have  not  been  informed  who, 
if  anybody,  favored  an  individual  income  tax  before  that  com- 
mittee. 

We  do  not  contend  that  the  system  of  taxation  upon  imports 
absolutely  prevents  all  inequality  or  injustice.  It  is  of  course 
not  a  perfect  system.  E^ual  and  exact  justice  to  each  individual 
citizen  is  not  possible  under  any  method  of  taxation  likely  to  be 
devised.  But  Federal  taxation  upon  foreign  importations — tax- 
ation upon  consumption,  if  you  pie  tee — indirect  taxation  imposed 
upon  what  you,  buy  and  use — is  preferable  to  direct  taxation  of 
any  kind.  The  fathers  of  the  Republic  so  regarded  it  when  they 
adopted  tariff  taxation  as  the  best  means  for  securing  Federal 
revenues.  They  may  have  been  mistaken,  and  possibly  we  are 
wiser  than  they  were. 

But  it  has  proved  reasonably  satisfactory  for  over  a  hundred 
years,  producing  ample  revenues  for  the  national  necessities,  ex- 
cept during  the  crisis  of  war.  and  no  political  party  has  ventured 
openly  to  declare  for  its  total  abandonment,  and  to  propose  di- 
rect taxes  in  place  thereof.  It  answers  a  twofold  purpose,  to 
wit:  First,  the  direct  or  principal  purpose  of  providing  reve- 
nue; second,  the  indirect  or  incidental  purpose  of  protecting 
home  producers,  manufacturers,  and  laborers  from  ruinous  for- 
eign competition. 

Revenue  is  the  primary  object  of  a  tariff,  and  all  else  is  merely 
secondary  or  incidental  thereto. 

I  do  not  propose  at  this  time  to  discuss  the  difference  or  the 
merits  of  the  two  policies  arising  out  of  tariff  taxation,  to  wit, 
a  tariff  for  revenue  and  a  tarilf  for  protection,  the  one  the  Dem- 
ocratic, the  other  the  Republican  policy.  These  points  of  dis- 
pute I  am  not  now  considering,  but  expect  to  do  so  at  a  future 
day. 

The  point  which  I  am  now  endeavoring  to  make  is  that  under 
tariff  taxation  in  general,  ample  revenues  have  not  only  been  de- 
rived, but  at  the  same  time  the  Industries  of  the  country  have 
augmented,  manufactures  have  prospered,  workingmen  have 
found  remunerative  employment,  labor  has  been  properly 
shielded  from  foreign  competition,  and  the  best  and  highest  in- 
terests of  the  whole  country  have  been  subserved:  many  of  which 
beneficent  results  would  have  been  impossible  under  any  sys- 
tem of  internal  or  direct  taxation. 

In  fact,  I  am  here  to  declare  my  belief  that  the  complete  sub- 
stitution of  internal,  direct,  or  income  taxes  for  tariff  taxes 
tea 


17 

would  prove  utterly  ruinous  to  the  business  interests  of  this 
country  under  existing  conditions  abroad.  A  partial  substitu- 
tion at  this  time  would  be  proportionately  disastrous. 

This  bill  proposes  a  suicidal  policy  when  it  seeks  by  its  ex- 
treme provisions  to  discard  numerous  reasonable  tarirf  duties 
and  thereby  imperil  many  industries  and  create  a  deficiency  in 
necessary  revenues,  simply  for  the  purpose  of  affording  an  op- 
portunity or  excuse  for  the  substitution  of  an  income  tax.  There 
is  an  ample  field  for  genuine  tariff  reform  without  a  resort  to 
such  an  unwise  and  dangerous  experiment.  Innumerable  re- 
ductions in  existing  rates— reasonable  and  necessary  reductions- 
are  perfectly  feasible,  such  as  will  not  create  any  further  defl 
ciency  nor  jeopard  a  single  industry. 

WHAT  IT  MEANS. 

The  substitution  of  internal  or  direct  taxes  for  custom-house 
taxation,  means  the  reduction  of  the  wages  of  American  work- 
men to  the  European  standards.  It  means  the  degradation  of 
American  labor;  it  means  the  deprivation  to  our  workmen  of  the 
comforts  and  luxuries  of  life  to  which  they  have  been  accus- 
tomed. 

Deny  it  or  disguise  it  as  we  may,  no  other  result  is  possible 
under  existing  European  conditions.  It  is  a  self-evident  prop- 
osition that  well-paid  labor  can  not  successfully  compete  with 
underpaid  labor.  In  Europe  wages  are  low  and  labor  is  de- 
graded; in  America  wages  are  high  and  labor  is  prosperous, 
elevated,  and  dignified.  The  General  Government  being  vested 
with  the  exclusive  power  of  custom-house  taxation  and  the 
States  being  prohibited  from  resorting  to  it,  the  Government 
should  exhaust  that  field  before  intrenching  upon  others. 

Let  me  not  be  misunderstood.  Not  one  dollar  of  tariff  taxa- 
tion should  be  imposed  except  what  is  necessary  for  the  needs 
of  the  Government,  economically  administered:  but  whatever 
those  needs  are,  the  necessary  revenues  therefor  should  be  sup- 
plied from  tariff  taxationand  thatalone,  saveand  exceptthe  taxes 
upon  liquors,  oleomargarine,  and  tobacco,  to  which  the  country 
has  long  been  accustomed,  and  which  for  obvious  reasons  need 
not  be  disturbed. 

Such  a  policy  is  a  reasonably  consistent  one,  and  should  be 
continued.  It  would  be  manifestly  unfair  to  the  States  todiver- 
sif}'  Federal  taxation.  It  is  now  condensed,  simplified,  and  prac- 
tically exclusive,  and  should  remain  so. 

IT  DUPLICATES  TAXATION. 

A.  Federal  income  tax  involves  multiple  taxation  in  several 
States,  where  State  income  taxes  already  exist.  This  bill  also 
proposes  to  tax  the  dividends  of  corporations  and  gifts  and  in- 
heritances, which  are  already  taxed  under  State  laws  in  New 
York  and  many  other  States,  thereby  compelling  such  States  to 
either  abandon  such  form  of  taxation  altogether  or  to  enforce 
and  sanction  what  would  clearly  be  oppressive  taxation.  The 
duplication  of  taxes  is  always  objectionable. 

The  threadbare  argument  is  urged  that  wealth  escapes  taxa- 
tion and  that  it  can  best  be  reached  through  an  income  tax.  If 
this  be  true  it  does  not  necessarily  require  a  Federal  income  tax. 
Let  those  States  where  wealth  is  believed  to  be  insufficiently 
taxed  reach  that  wealth  through  State  income  taxes  or  any 
other  methods  which  their  ingenuity  can  suggest,  and  no  one 
outside  of  those  States  will  be  heard  to  object.  Surely  States 

1228 2 


IS 

which  refuse  to  apply  the  means  within  their  power  to  equalize, 
diminish,  or  render  more  equitable  their  own  State  and  local 
taxation  ought  not  to  ask  the  assistance  of  the  General  Govern- 
ment to  relieve  them. 

State  and  local  taxation  rather  than  Federal  taxation  com- 
prises the  principal  burden  of  our  taxpayers,  and  to  each  state 
is  conceded  the  ri^ht  to  frame  and  execute  its  own  tix  laws, 
whereby  it  can  compel  the  wealth  within  its  own  borders  to  con- 
tribute whatever  share  of  taxation  it  may  determine  in  its  dis- 
cretion to  be  proper. 

This  is  all  that  any  Stat:;  can  reasonably  ask.  Certainly  no 
State  can  consistently  demand  that  its  own  prerogatives  shall  be 
encroached  upon  and  its  own  revenues  imperiled  by  the  General 
Government  in  order  that  the  State's  own  wealth  may  not  escape 
taxation. 

FEDERAL  VERSUS  STATE  AND  LOCAL  TAXATION. 

The  records  of  the  Census  Bureau  show  that  in  1890  the  State, 
c  mnty,  and  local  tixation  of  the  several  States  of  the  Union 
amounted  in  the  aggregate  to  $470,476,927.  The  total  Federal 
taxation  (ord  nary  expenditures)  for  the  last  completed  fiscal 
year  (lSi»3)  only  amounted  to  $383,477,954.49.  and  including  ex- 
traordinary expenditures  amounted  to  $4B1 ,916, 561. 94.  Of  this 
last  sum  only  $205, 35"), 016.73  were  realized  from  customs.  It  is 
the  custom-house  taxation  particularly  which  the  friends  of  di- 
rect Federal  t  ixation  claim  is  not  paid  equally  by  the  people, 
and  is  so  burdensome  to  the  poor  man;  and  yet  such  taxation  is 
not  equal  to  one-half  of  the  State  and  local  taxation. 

WHAT  STATES  WILL  PAT  THE  TAX. 

From  1863  to  1873  the  former  income  tax  extorted  from  the 
people  an  aggregate  sum  of  $317,220,897.86.  Of  this  sum  the 
Eastern  Statas  paid  18  per  cent,  the  Middle  States  53  per  cent, 
and  together  they  paid  71  per  cent.  New  York  alone  paid  -'50  per 
cent.  It  has  not  been  claimed  that  these  percentages  will  be 
materially  changed  if  this  bill  becomes  a  law. 

These  figures  speak  louder  than  words.  They  are  significant 
of  the  selfish  purposes  of  this  bill,  the  real  motives  behind  it, 
and  the  sourca  or  section  from  which  the  votes  necessary  for  its 
passage  are  expected  to  be  secured. 

Further  comment  becomes  unnecessary.  I  will  only  add  that 
1  am  not  ashamed  of  the  fact— on  the  contrary,  I  am  proud  of 
the  fact — that  New  York  is  the  wealthiest  State  in  our  Union; 
but  I  protest  that  this  circumstance  should  not  make  her  citi- 
zens the  target  of  every  vicious  scheme  which  discriminates 
against  her  interests,  and  especially  that  the  blow  should  not  be 
struck  by  thosa  political  friends  who  have  never  appealed  to 
her  in  vain  when  they  have  needed  evidences  of  her  friendship. 

A  STEP  TOWARD  SOCIALISM. 

It  is  charged  against  the  friends  of  a  Federal  income  tax  that 
they  are  artfully  driving  in  the  thin  edge  of  a  wedge  to  effect  a 
forced  redistribution  of  property. 

Toward  such  a  purpose,  were  it  fixed  in  the  minds  of  a  major- 
ity of  voters,  the  efficiency  of  every  kind  of  an  income  tax  is  un- 
deniable, whether  applied  in  State  laws  to  the  profit  of  classes, 
or  in  a  Federal  law  to  the  profit  of  sections. 

I  feel  bound  to  concede  that  the  sincere  object  of  the  great 
body  of  the  friends  of  a  Federal  tax  oa  incomes  is  not  an  experi- 
ment in  socialism,  is  not  a  swift  political  suicide,  but  is  the 
UM 


19 

straightforward  furtherance,  after  great  discouragement  and 
long  delay — the  furtherance  of  tariff  reform. 

The  choice  of  a  pivot  for  tariff  reform  in  this  bill  responds  to 
the  firm  tenacity  of  the  people  for  relief,  but  not  wisely.  The 
choice  follows,  to  be  sure,  a  notable  British  precedent,  hut  that 
precedent  is  quite  irrelevant  for  America,  where  Federal  and 
State  taxes  present  no  analogy  to  the  foreign  agglomeration  of 
imperial  and  local  taxation. 

The  British  Kingdom  is  straining  to-day  in  the  pangs  of  de- 
centralization. A  Federal  income  tax  would  lay  in  the  United 
States  the  great  corner  stone  of  future  centralization.  The 
choice  of  some  pivot  of  tariff  reform  in  the  United  States— that 
is,  obtaining  revenue  from  one  source  in  o;-der  to  discard  revenue 
from  another  source— is  a  necessity.  What  pivot  had  best  be 
chosen  is  pure  expediency.  The  British  choice  may  have  been 
expedient  in  Great  Britain.  An  identical  or  different  choice  in 
the  United  States  needs  to  be  shown  expedient  here.  Alone 
serving  the  purpose,  or  best  serving  the  purpose,  of  a  pivot  for 
tariff  reform,  must  be  the  test  of  expediency  for  an  income  tax 
in  the  United  States,  even  by  those  who  deem  it  an  inoffensive 
and  lawful  Federal  tax. 

It  is  obviously  inexpedient,  if  unnecessary.  Evidence  that  it 
is  unnecessary  for  the  purpose  of  its  friends  has  been  and  is  now 
offered  to  their  consideration. 

THE  ENGLISH  PRECEDENT. 

Praises  of  an  income  tax  which  are  quoted  in  the  CONGRES- 
SIONAL RECORD  from  British  books  will  be  found  upon  inspec- 
tion to  be  relative  to  the  demerit  of  the  discarded  taxes.  Mr. 
Gladstone  himself  desired  to  renounce  the  income  tax  after  it 
had  served  its  turn,  conceding  thus  its  injustice  and  inequality. 

I  do  not  misstate  his  position.  The  following  letter  written 
by  him  in  1892  to  a  London  newspaper  explains  itself: 

GLADSTONE'S  OPINION  OF  THE  INCOME  TAX. 

[From  the  London  Pall  Mall  Gazette.] 

I  am  not  aware  of  any  practicable  method  of  reforming  the  Inequalities 
and  injustices  of  the  income  tax.  For  this  reason.  I  with  my  colleagues  pro- 
posed its  abolition  in  1874;  but  the  country  decided  otherwise. 

W.  E.  GLADSTONE. 
JANUARY,  1892. 

That  statesman's  act  praises  good  tariff  taxation  over  bid  tariff 
taxation,  and  over  income  taxation,  too.  The  United  States  can 
find,  upon  reflection,  a  better  pivot  of  tariff  reform,  and  one  which 
will  not  need  to  be  renounced  for  its  own  demerits.  Pr  iises  of 
an  income  tax  and  theoretical  arguments  for  it,  quoted  in  the 
RECORD  from  the  British  treatises  of  political  economy,  will  be 
found  to  rest  on  the  assumption  that  it  be  the  sole  and  single 
tax— that  it  be  the  exclusive  means  of  defraying  government 
expense,  from  the  highest  imperial  to  the  lowest  police  func- 
tions, and  that  it  tolerate  no  exemptions. 

All  such  quoted  arguments  are  obviously  irrelevant  here.  No 
British  statesman  of  rank,  so  far  as  I  know,  differs  from  Mr. 
Gladstone's  opinion  that,  as  a  supplementary  tax,  the  income 
tax  in  Great  Britain,  where  upon  constitutional  grounds  it  is 
eligible,  it  is  as  indefensible  as  it  is  odious  in  time  of  peace,  and 
that  there  it  must  find  its  only  warrant  in  the  necessities  of 
war. 

No  American  statesman  of  rank,  except  Mr.  Cleveland,  has 
deemed  it  eligible,  since  our  war  experience  of  an  income  tax 

J228 


20 

made  manifest  that  here  too,  in  the  Northern  States,  it  was  gen- 
erally odious.  It  is  a  novelty  in  American  politics  to  make  its 
conclusions  and  procedures  deliberately  offensive.  It  is  like 
making  religion  immoral  and  urbanity  noisy,  in  order  to  com- 
mend and  propagate  them. 

IT  VIOLATES  STATE  RIGHTS. 

No  such  Federal  aggrandizement  was  ever  projected — no  such 
insidious  and  deadly  assault  upon  Sta^e  rights,  State  powers,  and 
State  independence,  as  a  Federal  income  tax. 

Mr.  Calhoun  would  have  thought  it  wasted  breath  to  discuss 
the  autonomy  of  States  or  the  limits  of  their  sovereignty  under 
an  income  tax  put  up  and  put  down  by  the  Congress  in  Washing- 
ton. 

Praises  of  an  income  tax  on  the  ground  that  it  reaches  accu- 
mulated wealth  assume  that  such  wealth  goes  untaxed  unless 
reached  by  Federal  laws.  The  assumption  is  absurd. 

Arguments  for  a  Federal  income  tax  drawn  from  the  existence 
of  State  taxes  on  incomes  admit  that  accumulated  wealth  is 
reached  without  Federal  laws  and  confess  incroachment  upon 
State  sources  of  revenue. 

Accumulated  wealth  looms  up  large  in  the  imagination  of  the 
foreign  socialist.  His  estimate  of  individual  fortunes,  published 
in  New  York  newspapers,  is  always  absurdly  excessive.  His 
moral  quality  is  frankly  betrayed  in  his  constant  preoccupation 
with  the  least  noble  possession  of  his  fellow-creatures. 

A  better  point  of  view  for  the  American  legislator  is  the  fact 
that  the  total  realized  material  wealth  of  the  human  race  is 
computed  by  the  best  economists  at  less  than  four  times  its  an- 
nual consumption.  Every  step  of  progress  destroys  wealth  to 
recreate  more.  Old  printing  presses,  old  cotton-mill  machines 
are  worthless. 

The  constant  personal  redistribution  of  realized  accumulated 
wealth  is  a  commonplace  of  the  moralists.  But  its  physical  and 
economical  redistribution  is  even  more  swift  and  general.  It 
can  not  escape  taxation  in  the  ceaseless  consumption  and  repro- 
duction which  are  the  condition  of  its  continuing  to  be  wealth. 

THE  HOUSE  ARGUMENTS. 

To  these  income-tax  arguments  sifted  from  the  debate  in  the 
House,  I  pay  the  respect  of  refutation,  because  of  my  entire  sym- 
pathy with  the  tenacious  purpose  to  advance  tax  reform,  which 
is  ostensibly  behind  them.  But  I  must  also  beg  permission  very 
respectfully  to  warn  the  devoted  champions  of  every  Democratic 
aspiration  not  to  neglect  principles  constitutiona.  and  economic 
which  are  deep-seated  in  the  lifelong  convictions  of  Northern 
Democrats,  merely  because  of  the  omission  of  the  present  Exec- 
utive to  wholly  share,  remember,  or  represent  them.  No  hon- 
est and  clear-headed  man  can  possibly  define  a  direct  tax  in  terms 
which  shall  be  capable  to  exclude  any  sort  of  income  tax  from 
the  circumscription  of  the  definition. 

Nobody  ever  had  a  doubt  before  the  war  that  the  constitu- 
tional inhibition,  upon  that  ground  alone,  was  peremptory  and 
conclusive.  I  do  not  quarrel  with  the  decision  of  the  Supreme 
Court  in  the  Springer  case;  but  the  doctrine  may  hereafter  be 
repudiated  by  the  present  court.  Such  things  have  happened 
be'fore. 

1228 


21 

The  income  tax  proposed  by  the  President,  or  that  incorpo- 
rated in  the  House  bill,  or  any  other  sort  of  Federal  income  tax, 
is  unsuitable  for  apportionment  among  the  several  States  accord- 
ing to  the  census  of  their  populations;  and  neither  pretends  to 
be  uniform,  applie  d  to  all  the  net  income  of  each  and  every  citi- 
zen, nor  can  be.  Direct  taxation,  by  definition,  making  argu- 
ment superfluous,  is  taxation  not  shifted,  distributed,  and  divided 
by  repercussion. 

A  single  tax  on  land  has  enlightened  advocates  on  the  ground 
that  it  would  be  distributed,  divided,  and  re  percussed  with  free- 
dom and  therefore  with  equity;  that  being  advanced  by  the  oc- 
cupier of  the  land  it  would  be  distributed  according  to  the  use 
of  the  land,  which  use  is  variable  while  universal — thus  resem- 
bling in  this  point  a  tax  on  sugar,  for  example,  which  being  ad- 
vanced by  the  importer,  would  be  distributed  according  to  con- 
sumption—another form  of  use,  variable  while  univers  il. 

Direct  taxation,  on  the  other  hand,  of  which  the  poll  tax  and 
the  tax  on  all  incomes  at  one  per  centage  are  perfect  illustrations, 
is  like  an  acid  which  must  eat  where  it  falls. 

Arguments  for  an  income  tax  assert  moreover  that  Congress 
is  empowered  to  apply  a  rule  of  inequality  and  a  principle  of  in- 
justice in  order  to  distribute  the  rewards  of  industry  and  thrift 
otherwise  than  they  are  distributed  among  men  acting  with  in- 
dividual freedom  under  equal  laws.  Such  a  grant  of  power  to 
Congress  has  not^yet  been  cited.  'But  if  such  a  grant  of  power, 
after  long  litigation  were  found  there,  or  after  the  long  process 
of  constitutional  amendment  were  put  there,  nevertheless  the 
test  first  to  be  applied  just  now  in  the  search  for  sources  of  rev- 
enue would  preclude  income  taxation. 

It  is  not  th?  most  immediate  and  most  adequate  remedy  for 
the  existing  lack  of  revenues  and  would  not  aid  the  revival  of 
our  prostrate  industries.  It  is  not  the  best  pivot  of  tariff  reform. 
It  jeopards  genuine  tariff  reform  for  another  decade. 

AN  UNWISE  COURSE. 

To  double  the  deficit  of  $78,000,000  by  way  of  ending  it:  to  dis- 
card 37>i.O  XMJOO  of  annual  revenue  in  order  to  collect  twice  as 
much  in  other  ways;  to"embjdy  tariff  reform"  as  the  Presi- 
dent imagined  himself  to  be  doing  in  his  scheme  to  substitute 
direct  taxes  for  the  tariff  taxes  which  were  to  be  reformed;  to 
reconstruct  all  the  schedules  instead  of  amending  or  discarding 
one  group  at  a  time,  the  worst  first  and  each  upon  its  own  de- 
merits; to  disturb  and  distress  as  many  business  men  as  possi- 
ble and  all  at  once,  instead  of  few  at  a  time,  is  not  a  programme 
perfectly  matured  and  suited  to  conduct  the  policy  and  princi- 
ple of  tariff  reform  unimpaired  through  a  period  of  general 
business  prostration,  public  deficit,  and  private  bankruptcy. 

For  my  own  part,  as  a  Democrat,  I  prefer  indirect  taxation 
and  tariff  reform  above  direct  taxes  and  tariff  extinction.  I  pre- 
fer taxing  fore  ign  products  rather  than  taxing  home  products. 
I  follow  Jefferson  in  regarding  even  the  species  of  indirect  taxa- 
tion on  home  products  by  internal  revenue  war  taxes  as  not  good 
to  be  extended  and  the  first  to  be  rid  of  when  their  need  is 
past. 

In  the  language  of  the  Democratic  national  platform  of  1884: 

From  the  foundation  of  this  Government  taxes  collected  at  the  custom- 
house have  been  the  chief  source  of  Federal  revenue.    Such  they  must  con- 
tinue to  be. 
1228 


22 

In  the  language  of  the  New  York  Chamber  of  Commerce,  Jan- 
uary 12,  1894: 

The  Chamber  of  Commerce  *  *  *  believe  without  distinction  of  party 
lines  *  *  *  that  in  addition  to  an  internal-revenue  tax  now  in  force,  the 
necessary  expenses  of  the  Government  should  be  collected  through  the  cus- 
tom-house. 

The  President's  proposal  to  invert  the  method  of  our  Federal 
taxation  runs  precisely  counter  to  the  principle  and  the  practice 
preferred  by  the  founders  of  our  Republic,  and  to  which  a. ter 
every  aberration  the  apostles  of  Democracy  have  led  the  re- 
turn. But  were  all  this  otherwise,  nevertheless,  I  would  first 
and  foremost  consider  how  to  add  sufficient  revenue  best  and 
soonest. 

I  would  remember  the  captains  of  industry.  I  would  remem- 
ber the  bre.id winners.  And  if  our  Federal  revenues,  bottomed 
heretofore  upon  cus'.oms  duties  on  foreign  products,  were  here- 
after to  be  bottomed  upon  taxes  on  home  products  and  a  few  in- 
comes, I  could  never  counsel  a  President  or  a  Congress  to  sound 
the  tocsin  of  that  revolution  in  the  black  midnight  following  a 
general  slaughter-day  of  all  private  incomes. 

THE  FOREIGN  PRECEDENTS. 

The  State  Department  through  our  consuls  in  Europe  has  made 
a  collection  of  income-tax  laws— every  hideous  octopus  that  is 
sucking  out  the  life-blood  of  the  people  of  Europe  to  support  war 
navies  and  war  armies — and  fetches  them  over  for  model  exam- 
ples to  this  land  of  liberty,  this  continent  of  industrial  peace. 
Fit  models,  tine  examples!  They  have  taught  the  draftsmen  of 
this  bill  one  lesson  too  many.  They  have  taught  the  draftsmen 
of  this  bill  with  just  what  form  of  words  to  constitute  a  class  of 
official  highwaymen  for  blackmailing  or  plundering  every  man 
of  property  in  the  United  States.  Is  that  harsh?  Then  I  say  tka  t 
were  the  teachers  angels  and  the  pupils  better  than  the  best  of 
men,  no  form  of  words  their  wit  could  contrive  would  fail  of 
spawning  just  that  infamy.  It  is  inherent,  intrinsic:  it  sticks 
in  the  very  nature  of  any  Federal  income-tax  law  whatever. 

JEFFERSON'S  SENTIMENTS. 

Jefferson's  Fontainebleau  letter  has  been  quoted  in  this  dis- 
cussion. That  letter  was  written  on  the  eve  of  the  French  Ur>v- 
olution.  It  was  written  in  the  presence  of  those  awful  social 
wrongs  and  the  political  inequality,  injustice,  and  oppression 
from  which  that  historic  convulsion  ensued.  It  is  actually  q  ioted 
as  helpful  authority  by  men  favoring  ;in  income  tax,  in  a  century, 
a  hemisphere,  and  a  state  where  exists  not  one  of  all  the  affect- 
ing circumstances  that  Jefferson's  kind  heart  grieved  over,  and 
his  philosophic  mind  scanned  all  the  darkening  sky  for  peaceful 
methods  to  relieve. 

The  Fontainebleau  letter  reveals  him  ane.w  in  those  power- 
ful yet  winning  traits  which  make  his  life  and  characier  the  ad- 
miration of  every  American.  Indeed  the  most  impressive  ar- 
gument against  an  American  income  tax  is  foreshadowed  from 
his  thrilling  page.  It  is  a  fit  "  prologue  to  the  swelling  act  of 
the  imperial  theme''  of  the  great  inaugural  address. 

OCR  AMERICAN  PRINCIPLES  OF  GOVERNMENT. 

The  United  States  of  America  have  hitherto  received  and  are 
now  receiving  from  the  best  races  of  other  States,  nations,  and 
empires,  the  tribute  of  a  surpassing  praise,  without  precedent 


23 

in  history — the  praise  of  the  desii-e  of  their  young  men  and  young 
women  to  assimilate  their  lives  to  ours,  and  their  children's 
hlood  with  the  blood  of  our  children,  the  praise  of  their  desire 
to  escape  the  burdens  of  past  and  future  wars  and  be  at  peace, 
the  praise  of  their  desire  to  escape  from  the  inequalities  of  priv- 
ilege to  an  equality  of  rights,  from  European  thrones,  domina- 
tions, hierarchies,  classes,  and  castes,  political,  ecclesiastical,  or 
social,  to  an  American  individual  liberty  and  civil  equality,  to 
our  forms  of  government,  founded  upon  popular  elections,  ex- 
pressed in  written  constitutions,  embodied  in  a  permanent  union 
of  i  ermanent  States. 

It  may  be  impracticable  that  our  distinctively  American  ex- 
periment of  individual  freedom  should  go  on.  Its  novelty,  as 
known  by  experience  to  the  e  irlier  immigration,  can  hardly  be 
expected  to  receive  full  appreciation  even  from  the  most  in- 
telligent immigrants  of  the  present  generation.  Our  separation 
from  the  traditions  and  habits  of  thought  of  the  Old  World  was 
so  complete  that  the  Declaration  of  Independence  ratified  an  old 
fact  rather  than  accomplished  a  new  fact.  The  Constitution  of 
the  United  States  confirmed  us  in  the  possession  of  that  inde- 
pendent tradition  and  a  complete  individual  freedom. 

The  States  which  it  united,  the  Federal  Government  which 
it  established,  are  chiefly  remarkable  for  their  inhibitions  of 
po'-ver,  for  their  limitation  of  granted  powers,  for  the  strength 
and  multiplicity  of  their  safeguards  of  individual  freedom.  The 
sovereignty  of  the  people,  incontestible,  possessed,  fresh  like 
the  dew  of  morning  in  the  beginning  of  our  day  and  not  like  the 
dust  and  sweat  of  centuries  of  strife,  was  here  first  asserted  and 
made  manifest  throughout  the  whole  area  of  its  jurisdiction,  in 
its  reservations  and  self-denials,  in  those  limits  set  to  its  control, 
in  those  fortiiied  safeguards  of  civil  equality  and  individual  lib- 
erty. 

Perhaps  it  is  a  dream  that  such  a  paradise  as  we  have  pos- 
sessed could  1  e  secure  from  change.  The  pick  of  the  foremost 
races  of  mankind  still  are  streaming  hither,  but  now  they  bring1 
another  tradition.  They  come  from  that  group  of  crowded,  con- 
tiguous armed  cariips  called  Europe.  Th.^y  have  not  had  train- 
ing for  generations  in  self-government.  Some  few  have  had  a 
little  training  in  getting  possession  of  large  governmental  pow- 
ers, existing  and  long  used  in  disregard  of  popular  rights. 
They  have  not  had  the  habitude  of  popular  sovereignty  uncon- 
tested,  popular  rights  enjoyed  like  air  and  water;  they  have  not 
lived  in  civil  equality  and  individual  liberty  like  ours,  guarded 
with  eternal  vigilance  against  the  very  governments  our  fathers' 
hands  and  our  own  have  made,  and  put  bounds  to,  and  unwea- 
riedly  repressed. 

Across  the  water,  among  European  peoples,  human  freedom 
enlarges,  if  it  is  enlarging,  slowly.  Out  of  armed  camps  not 
yet  h  is  grown  a  civil  polity  which  refuses  powers  to  the  state 
in  order  to  guard  freedom  for  the  man.  State  powers  grow.  If 
individual  freedom  anywhere  is  broadening  there,  its  growth  is 
subject  to  an  inheritance  from  which  we  completely  at  one 
stroke  escaped,  and  to  hazards  hitherto  unknown  by  us.  The 
growth  of  human  freedom  in  Europe  is  subject  to  hazards  from 
extensive,  minute,  searching,  inquisitorial  governmental  pow- 
ers, existing,  organized,  and  predominant. 

It  is  that  sort  of  an  inheritance,  not/  our  Xew  World  sort, 
which  the  peoples  of  Europe  are  called  to  administer,  as  one  \y 
1228 


one,  after  long  wrestling  with  intermarried  dynasties,  through 
wars  and  revolutions,  they  succeed  to  the  substance  of  sover- 
eignty. Interferences  with  individual  freedom  are  customary, 
and  breed  their  own  tradition.  The  governments  are  of  mili- 
tant and  not  industrial  pattern.  Their  machinery  is  organized 
for  repression:  has  had  interference  and  control  for  means  and 
end.  That  which  was  and  is  the  interest  of  monarchies  and 
aristocracies,  in  becoming  the  inheritance  becomes  the  tempta- 
tion and  the  hazard  of  their  democracies. 

THE  WEAPON  OF  MONARCHIES. 

Taxation  of  all  sorts,  taxation  at  every  turn,  taxation  upon  in- 
comes, with  all  the  necessary  bureaucracy,  machinery,  and  in- 
quisition, has  long  been  the  appropriate  and  most  perfected  in- 
strument with  which  European  governments  have  multiplied 
their  functions  and  prolonged  their  supervision,  their  control, 
their  repression  of  the  people's  doings.  W  hile  the  founders  of 
our  democratic  Republic,  hiding  the  taxgatherers  in  a  few  sea- 
board custom-houses,  bade  them  remember  they  were  the  peo- 
ple's servants  and  stick  to  an  inoffensive  obscurity,  the  tax- 
gatherers  of  Europe  became  a  fat  official  class,  leaders  of  the 
local  society,  parasites,  pupils,  and  servants  to  every  occupant  of 
a  throne. 

The  leaders  of  the  democracies  who  are  approaching  sover- 
eignty slowly  and  clutching  for  the  handle  of  every  power  whose 
edge  they  have  felt,  dreading  the  reaction  that  has  followed  con- 
fiscation of  privileged  estates,  perceive,  or  think  they  see.  in  the 
taxation  of  incomes  a  safer  and  attractive  weapon  of  redress.  In- 
stead of  the  settled  supremacy  here  of  man  versus  the  state, 
there  we  see  survivals  of  an  earlier,  almost  a  barbaric,  phase  of 
human  progress,  and  the  war  of  a  class— the  poor  and  the  un- 
privileged— to  capture  the  state  in  order  to  make  reprisals  upon 
another  class,  the  privileged  and  the  rich. 

Taxation  is  even  the  favorite  organ  of  more  advanced  Euro- 
peans who  would  bottle  into  the  political  and  corporate  struc- 
tures of  society  those  innumerable  limitless  fountains  of  social 
beneficence  which  here  have  found  their  widest,  deepest  flow 
through  free  lives  from  the  free  hearts  of  free  men.  So  it  hap- 
pens that  local  troubles  and  a  passing  phase  of  the  secular  prog- 
ress of  Democracy  in  the  Old  World  take  on  the  aspect  of 
socialism,  whereas  in  this  new  world  of  United  States  our  de- 
mocracy has  always  been  freedom. 

OTTB  EUROPEAN  ADVISERS. 

The  nonmigrating  European  feels  a  parental  superiority  and 
duty  toward  us.  European  professors  announce  to  American 
professors,  who  publish  and  believe  it,  the  birth  of  a  brand  new 
political  economy  for  universal  application.  Prom  the  midst 
of  their  armed  camps  between  the  Danube  and  the  Rhine,  the 
professors  with  their  books,  the  socialists  with  their  schemes, 
the  anarchists  with  their  bombs,  are  all  instructing  the  people 
of  the  United  States  in  the  org  mization  of  society,  the  doc- 
trines of  democracy,  and  the  principles  of  taxation.  Little 
squads  of  anarchists,  communists,  and  socialists  cross  the  ocean 
and  would  have  us  learn  of  them.  No  wonder,  if  their  preach- 
ing can  find  ears  in  the  White  House. 

An  editor  residing  in  Europe,  of  Hungarian  birth,  in  his  New 
York  newspaper  advocates  an  income  tax  designed  ultimately 
to  put  upon  nine  States  between  Cape  Cod  and  the  Mississippi 

1228 


25 

77  per  cent,  and  upon  New  York  alone  30  per  cent  of  the  ex- 
penses of  the  Federal  Government. 

That  taxation  of  incomes  in  the  United  States  would  be  sec- 
tional and  class  taxation  Is  precisely  why  it  commends  itself  to 
some  men  of  the  European  tradition.  Their  advocacy  is  sincere, 
and  has  one  small  excuse,  that  through  our  own  stupidity  and 
negligence  some  parts  of  our  tariff  schedules  have  been  shaped 
to  enrich  a  fewCarnegies  with  texts  for  sermons  on  triumphant 
democracy  and  the  best  use  of  wealth. 

If  McKinleyism  is  socialism  for  the  benefit  of  the  rich,  and  in- 
come taxing  is  socialism  for  the  benefit  of  the  poor,  no  true 
American  Democrat  will  look  to  the  hair  of  the  dog  to  cure  his 
bite.  American  Democrats  will  reject  socialism  of  both  kinds. 

THE  AGGRANDIZEMENT  OF  GOVERNMENTS. 

It  is  not  to  be  overlooked,  moreover,  that  the  chief  cost  of  our 
war  of  secession  is  accruing  now,  not  so  much  in  the  pension  list 
as  in  the  usual  war  expansions  and  war  aggrandizements  of  gov- 
ernmental power  first  usurped  in  the  name  of  patriotic  neces- 
sity, defended  in  the  unrighteous  decisions  of  courts,  unrenounced 
by  Congress,  and  tolerated  because  customary  by  the  people. 

'Yet  if  all  the  expense  of  the  Federal  Government  could  be  as- 
sessed upon  the  income  of  two  hundred  and  fifty  multimillion- 
aires who  would  never  know  the  difference,  and  if  all  th  >ir  for- 
tunes had  been  acquired  otherwise  than  by  free  competition  un- 
der equal  laws,  there  could  be  no  compensation  for  wrecking 
our  American  experiment  of  individual  freedom  by  giving  to 
the  oiHcers  and  taxgatherers  of  the  Federal  Government  con- 
tact with  the  contracts,  business,  or  property  of  individuals 
within  the  States. 

In  the  official  class  our  fathers  saw  the  natural  magnifiers  of 
government  and  expanders  of  its  functional  areas.  They  es- 
chewed its  systematic  domination  and  espionage.  They  gave 
the  Federal  taxgatherers  no  mission  to  draw  up  all  things  to  a 
central  head  at  this  Capitol.  They  virtually  dissolved  that  Old 
World  institution,  the  standing  army  of  tithe-takers.  They  es- 
chewed direct  taxes  to  punish  thrift  and  penalize  prosperity. 
Th -y  derived  the  revenues  of  the  Federal  Government  from 
taxes  levied  at  the  seaboard  upon  things  of  foreign  origin 
brought  for  consumption  here.  Thus  avoiding  eve  ry  risk  of  du- 
plicated or  overlapping  taxation,  they  left  to  the  undiminished 
State,  city,  county,  neighborhood  authority,  also  undiminished 
all  the  great  sources  of  revenue. 

Europeanizing  this  America,  the  lovely  cynosure  of  nations, 
would  soon  make  it  wortn  no  man's  while  to  climb  the  sea  wall 
of  our  paradise.  Its  natural,  almost  unavoidable,  invasion  by 
foreign  traditions,  unfamiliar  to  our  vital  air  of  perfect  liberty, 
is  already  great,  continuous,  increasing.  While  we  welcome 
the  immigrant,  let  us  keep  safe  the  inestimable  though  unvalued 
jewel  of  our  great  state.  If  we  owe  that  which  is  unique  in  our 
American  freedom  to  that  which  is  unique  in  the  partition,  the 
limitation,  the  inhibition  of  government  powers,  let  us  now  stand 
fast  for  the  confines  of  that  sovereignty  "  within  whose  circuit 
is  Elysium." 

THE  PRACTICAL  QUESTIONS. 

The  House  bill  created  a  deficiency  in  the  revenues  necessary 
for  the  Government. 

It  then  became  the  duty  of  the  Senate  Finance  Committee  to 
1228 


26 

supply  that  deficiency,  which  they  proceeded  to  discharge. 
What  were  the  questions  which  presented  themselves  to  that 
committee  at  the  outset  of  their  endeavors  and  which  now  con- 
front this  Senate  in  its  final  action? 

I  conceive  th^m  to  be  these: 

What  imported  articles,  if  tariffed,  will  best  and  soonest  end 
the  growing  Tre.i&ury  deficit,  and  so  remove  a  chief  hindrance 
to  the  release  of  capit.il  and  employ  of  labor'?  Can  one  or  more 
be  found  from  which  revenue  will  be  immediate,  continuous, 
sufficient,  of  unquestioned  legality  so  as  not  to  be  delayed  by 
years  of  strife  in  the  courts,  of  use  and  distribution,  universal,  if 
possible,  so  that  the  harden  may  be  least  felt?  Can  the  revenue 
therefrom  be  collected  in  the  lump  at  the  seaboard,  and  final 
payment  made  by  t>'>,UOO.OOO  consumers  at  the  most  convenient 
time  and  way,  namely,  just  before  consumption  in  a  small  addi- 
tion to  its  price? 

Can  the  whole  addition  to  the  price  of  the  tariffed  article  be- 
yond its  price  if  not  tariffed,  being  all  the  tax,  go  to  the  Federal 
Treasury,  without  abatement,  stop  the  growing  deficit  and  re- 
lease the  deadlock  of  our  industrial  energies?  I  would  hazard 
no  steps  in  the  mere  revision  of  taxation  except  secure  and  solid 
steps,  each  one  justified  by  the  result  of  the  previous  step,  and 
accompanied  every  one  by  the  confidence  of  the  mass  of  the  peo- 

Ele  instead  of  by  their  dread  and  fear.    If  my  counsels  were 
eeded  I  would  surprise  and  satisfy  the  country  by  the  conser- 
vatism of  our  progress  in  revenue  reform.     The  McKinley  bill 
lost  the  country  to  our  opponents  by  its  extreme  features  in  one 
direction,  and  we  should  avoid  the  opposite  extreme. 

TAX  ON  CONSUMPTION. 

"  Tax  on  consumption  "  is  another  current  phrase  that  shuts  off 
light.  It  puts  blinders  on  men  and  prevents  their  seeing  how 
many  considerations  should  have  weight  in  choosing  a  tariff 
tax,  and  that  if  a  tax  be  a  tax  on  consumption,  that  is  no  reason 
for  rejecting  it,  even  if  there  were  twenty  good  reasons  for  re- 
jecting it  on  other  grounds. 

All  tariff  taxes,  and  ninety-hundredths  of  all  possible  internal- 
revenue  taxes,  are  taxes  on  consumption.  The  time  of  consump- 
tion varies.  An  anchor  may  take  twenty  years  —an  orange  two 
minutes.  Just  as  the  correlative  of  buying  is  selling,  just  as  the 
counterpart  of  money  is  commodity,  so  the  correlative  of  con- 
sumption is  production,  and  in  each  of  these  two  correlatives  is 
the  other  s  being,  end,  and  aim.  It  is  to  consume  that  we  pro- 
duce: it  is  to  produce  that  we  consume.  Neither  process  can  be 
stayed,  yet  a  man  live,  or  a  state,  or  the  race. 

Whereabouts  in  the  eternal  round  shall  we  tap  for  taxation? 

How  plain  it  is  now,  when  a  mere  phrase  no  longer  shuts  off 
vision,  that  for  purposes  of  taxation  toward  the  public  expense 
and  general  welfare,  consumption  should  be  tapped  and  not  pro- 
duction. Increased  production  of  whatever  is  good  and  neces- 
sary for  consumption  is  palpably  everybody's  interest.  Other 
things  being  equal,  price  falls  as  production  increases,  making 
consumption  less  costly.  Wants  are  satisfied  by  production,  and 
nobody  can  contract  himself  out  of  everybody's  similar  interest 
in  its  increase, 

But  there  is  no  such  universal  and  similar  interest  of  every- 
body in  anybody's  consumption.  That  is  the  individual's  affair, 
and  his  consumption  offers  the  least  injurious  point  of  taxation 

1228 


27 

for  him  in  every  individual  case.  Another  merit  of  taxes  on 
consumption  is  that  they  are  surmounted  in  detail,  and  paid 
at  the  will  of  the  consumer  in  the  enhancement  of  price.  If 
noted,  they  are  self-assessed,  with  the  least  inconvenience  at  the 
best  time,  in  the  smallest  sum;  or  they  are  declined  and  avoided 
without  illegality. 

If  a  thing  were  homogeneous,  and  its  consumption  were  univer- 
sal, if  its  bulk  were  considerable  but  its  cost  small,  such  qu  ilities 
combined  would  make  that  thing  the  most  perfect  distributor, 
through  voluntary  consumption,  of  an  equitable  taxation.  Assur- 
edly in  our  Federal  Government  we  may  well  reg  ird  a  distribu- 
tive equality  as  the  best  character  of  its  taxation,  leaving  to 
State,  municipal,  and  local  taxation  exemptions  of  burdens  which, 
as  varying  from  the  general  mass  of  our  citizenship  and  prop- 
erty, or  for  reasons  apart  from  revenue,  or  for  considerations 
other  than  common  and  equal  to  all,  local  authorities  with  local 
knowledge  and  closer  watch-care  for  any  exceptional  purpose 
may  impose. 

THE  HOUSE  VERSUS  THB  SENATE. 

The  Finance  Committee,  in  their  effort  to  modify  the  House 
bill  so  as  to  realize  a  sujfitnency  rather  than  a  deficiency  of  rev- 
enue, selected  sugar  as  one  of  such  articles  deemed  proper  for 
tariff  taxation,  and  provided  for  a  moderate  duty  thereon.  I-do 
notquestion  the  wisdom  of  their  present  action.  But  such  con- 
clusion should  have  been  fo  llowed  by  an  elimination  of  the  in- 
come tax  rendered  doubly  unnecessary  by  the  imposition  of  a 
sugar  duty. 

It  is  difficult  to  reconcile  the  House  bill  with  correct  princi- 
ples of  revenue  reform  or  with  the  previously  expressed  senti- 
ments of  some  of  its  authors.  The  cultured  chairman  of  the 
Ways  and  Means  Committee  [Mr.  WILSON]  in  his  article  pub- 
lished in  the  North  American  Review  of  January  last,  criticising 
the  McKinley  bill,  said  as  follows: 

Raw  sugars  were  our  chief  revenue-producing  articles  on  the  customs 
list,  and  so  It  (the  McKinley  law)  wiped  out  the  duties  upon  them  with  the 
Tirtuous  cry  of  -'a  free  breakfast  table  for  the  workingmen."  Both,  these 
taxes  (tobacco  and  sugar]  were  in  a  just  and  proper  senserevenut  faxes.  The  to- 
bacco tax  should  not  have  been  touched.  Decau.se  it  went  directly  into  the 
Treasury  from  the  pocket  of  the  taxpayer  and  was  burdensome  upon  no  one. 
The  sugar  tax  m'ght  very  properly  have  been  reduced,  but  should  not  nave 
been  entirely  abolished,  because  of  all  the  Items  In  the  tariff  It  carried  the 
largest  proportionate  amount  of  what  the  people  paid  into  the  Treasury. 

Yet  the  House  bill  which  bears  Mr.  WILSON'S  honored  name 
actually  followed  the  McKinley  bill  in  rejecting  a  duty  upon  raw 
sugars. 

In  that  same  article  Mr.  WiLSON  mildly  advocated  a  corporate 
income  tax,  but  did  not  favor  an  individual  income  tax.  In 
speaking  of  the  latter  he  admitted  that  it  would  be  "  universally 
evaded''  and  ''easily  lend  itself  to  fraud,  conce  ilment.  and  per- 
jury," and  its  administration  would  be  lt  necessarily  accompanied 
by  some  exasperating  and  some  demoralizing  incidents."  He 
favored  a  corporate  income  tax  because  ".s«c/i  a  tax  would  not  be 
a  tax  upon  individual  thrift,  energy,  or  enterprise,  but  in  the  main 
upon  the  earnings  of  invested  capital.1' 

Mr.  WILSON,  in  his  eloquent  soeech  in  the  House  on  February 
1  last,  admitted  that  he  "had  some  doubt  as  to  the  expediency 
of  apersonal  income  tax  at  this  time,"  and  expressly  stated  that 
he  "did  not  concur  in  the  policy  of  attaching  an  income  tax  to 
the  tariff  bill." 

1228 


28 

Yet  in  spite  of  his  own  personal  judgment  and  evidently  Bin- 
cere  protestations,  an  individual  income  tax,  which  taxed  not 
only  "invested  capital"  but  also  "individual  thrift,  energy, 
and  enterprise'' — was  actually  attached  to  this  tariff  bill,  and 
Mr.  WILSON  was  persuaded  to  support  it. 

HO  CLAS3  SHOULD  PAY  ALL  THE  TAXES. 

I  have  no  patience  with  the  demagogic  clamor  which  is  con- 
stantly demanding  that  the  rich  shall  pay  all  the  taxes. 

Those  who  thoughtlessly  repeat  this  cry  need  to  be  reminded 
that  this  Government  is  not  a  plutocracy,  but  a  Republic.  Here 
manhood  suffrage  almost  universally  prevails,  and  property 
qualifications  for  political  positions  of  honor  and  trust  are  nearly 
everywhere  prohibited.  The  highest  positions  in  the  land  are 
open  to  the  aspirations  of  the  poorest  and  most  obscure  youth 
anywhere  to  be  found. 

It  is  fitting  that  it  should  be  so.  But  the  poor  man  who  owns 
no  real  estate  or  personal  property  pays  nothing  directly  toward 
State,  county,  or  municipal  taxation — nothing  toward  the  free 
schools  which  his  children  attend,  nothing  toward  the  mainte- 
nance of  the  highways  over  which  he  travels,  nothing  toward  the 
expenses  of  the  courts  where  his  rights  are  vindicated  and  his 
wrongs  redressed,  nothing  for  lighted  streets,  police  protection, 
public  hospitals,  jails,  or  almshouses,  and  nothing  for  the  church 
at  which  he  worships,  because  here  we  have  no  established  re- 
ligion: and  if  it  were  not  for  custom-house  tixation — taxation 
upon  consumption — he  would  pay  not  a  farthing  toward  the 
support  of  the  Government  which  protects  him  and  under  which 
he  enjoys  the  blessings  and  privileges  of  a  free  and  independent 
citizen. 

It  is  through  this  much-abused  system  of  tariff  taxation — much 
abused  by  its  enemies,  and  misused  or  carried  to  extremes  some- 
times by  its  friends — that  we  are  enabled  to  equalize  somewhat  the 
burdens  of  government.  It  may  be  safely  asserted  as  an  equitable 
principle,  involving  no  hardship  to  anyone,  that  citizens  with- 
out ownership  of  real  estate  or  taxable  personal  property,  con- 
stituting the  most  numerous  class  in  every  community,  and  who 
pay  no  State  or  local  taxes,  ought  to  contribute  something  toward 
the  expenses  of  the  General  Government  under  which  they  live; 
and  to  enforce  the  performance  of  such  patriotic  obligation  the 
system  of  indirect  taxation  based  on  duties  upon  foreign  imports 
affords  the  least  offensive  method. 

If  the  contention  that  the  rich  should  pay  all  the  taxes  and 
the  poor  be  exempted  therefrom  is  well  foun  led,  then  it  may 
well  be  urged  that  the  rich  should  monopolize  the  suffrages  and 
offices  of  the  country. 

The  very  fact  that  every  citizen  is  obliged  to  contribute  some- 
thing, no  matter  how  little,  toward  the  expenses  of  govern- 
ment, whether  he  owns  property  or  not,  fortifies  his  right  to  the 
elective  franchise  and  augments  his  claim  for  political  prefer- 
ment. He  should  regard  it  as  a  privilege  conferred  upon  him, 
a,  shield  against  political  ostracism;  it  increases  his  dignity  and 
inliuence:  and  he  naturally  takes  a  keener  interest  in  public  af- 
fairs. The  true  welfare  of  the  community  is  subserved  by  this 
system  of  indirect  taxation  which  reaches  all,  but  oppresses 
none. 

I  am  opposed  to  any  income  tax  which  wholly  or  in  part  pro- 
poses to  supersede  this  wise  and  useful  method  of  taxation. 

1228 


29 

In  the  year  1875-'76  a  commission  of  most  distinguished  aud 
reputable  gentlemen  appointed  by  the  governor  of  New  York 
reported  to  the  Legislature  of  that  State  in  favor  of  a  scheme 
of  municipal  government  whereby  only  those  who  owned  prop- 
erty and  paid  local  taxes  should  be  entitled  to  vote  for  the  mu- 
nicipal officers  vested  with  the  control  or  disbursement  of  pub- 
lic funds. 

It  was  plausibly  argued  that  citizens  who  contribute  nothing 
to  the  support  of  the  municipality  ought  not  in  common  fairness 
to  be  permitted  to  control  its  improvements,  to  authorize  its 
public  works,  or  to  spend  its  revenues,  while  the  class  who  pay 
all  the  municipal  taxes,  if  in  the  minority,  are  compelled  to  ac- 
quiesce. The  argument,  if  carried  out  to  its  legitimate  conclu- 
sion, would  favor  a  plutocratic,  rather  than  a  democratic,  form 
of  government,  and  additional  weight  would  attach  to  it  if  citi- 
zens who  pay  no  local  taxes  should  also  be  exempt  from  all  Fed- 
eral taxation. 

It  is  a  significant  fact  that  the  Constitution,  which  requires 
noproperty  qualification  and  recognizes  manhood  suffrage,  should 
at  the  s  ime  time  provide  for  tariff  taxation  as  a  source  of  reve- 
nue which  is  set  apart  exclusively  as  the  property  or  function 
of  the  General  Government,  and  conveying  the  idea  that  such 
suffrage  and  indirect  tariff  taxation  were  intended  to  be  insep- 
arable— one  to  mitigate  or  to  justify  the  other, 

THE  POPULATION  VERSUS  THE  TAXPAYERS. 

The  comptroller  of  the  city  of  New  York  semiofficially  in- 
forms me  that  the  number  of  individual  taxpayers  in  the  city  of 
New  York  is  about  109,000.  Yet  that  city  has  a  population  of 
1,801,7:59  according  to  the  State  census  of  1892,  and  of  1,515,301 
according  to  the  Federal  census  of  1890. 

The  disproportion  between  taxpayers  and  population  may  not 
be  so  large  in  some  other  cities,  but  it  is  believed  that  in  almost 
every  city  and  section  of  the  country  the  population  is  ten  times 
greater  than  the  number  of  individual  taxpayers.  The  fact  that 
nine-tenths  of  our  population  pay  nothing  directly  toward  State, 
county,  and  local  taxation  adds  force  to  the  argument  that  they 
should  continue  to  be  reached  indirectly  through  tariff  legisla- 
tion. 

NO  NEED  OT  AN  INCOME  TAX. 

The  next  point  which  I  desire  to  submit  is  that  the  necessi- 
ties of  the  Treasury  do  not  require  an  income  tax.  This  propo- 
sition can  be  easily  and  clearly  demonstrated. 

The  Secretary  of  the  Treasury  in  his  annual  report  estimates 
that  the  amount  needed  for  the  support  of  the  Government  for 
the  next  fiscal  year  will  be  $448,30o,789.93.  He  also  estimates 
that  upon  tlie  basis  of  existing  laws  the  revenues  for  the  same 
period  will  be  as  follows: 

From  customs $190,000,000.00 

From  internal  revenue 160,000,000.  00 

From  miscellaneous  sources 20,000,000.00 

From  postal  service 84,427,748.44 

Total  estimated  revenues 454,427,748.44 

Permit  me  to  observe  at  the  outset  that  this  (Wilson)  bill  as 
it  passed  the  House,  discarded  existing  tariff  revenue  to  the 
amount  of  $73,680,418  80,  as  accurately  figured  by  Treasury  ex- 
perts. Senator  VOORHEES  in  his  speech  states  the  amount  to 
be  $76,670,000,  and  for  the  purposes  of  this  discussion  we  will 

1228 


30 

assume  the  latter  amount  to  be  correct.  This  large  reduction 
created  a  deficiency  in  the  amount  absolutely  necessary  to  be 
realized  for  the  support  of  the  Government.  The  Ways  and 
Means  Committee  recognized  that  fact  and  in  their  report  to 
the  House  accompanying  the  tariff  portion  of  this  bill  declared 
that  they  intended  thereafter  to  provide  "  internal- re  venue  tax- 
ation, which  will  make  up  any  deficit  of  public  revenue."  (See 
their  report  of  December  19,  1893.} 

Thereafter  and  before  the  bill  passed  the  House,  the  income 
tax  ($30,000,000)  an  1  an  addition .il  tax  on  spirits  ($10,000,000) 
were  added,  but  even  this  increase  left  a  I»rg3  deficiency,  ac- 
cording to  then  official  estimates. 

Yet  many  ovor/e  ilous  friends  and  impatient  newspapers  de- 
manded th.it  the  Senate  should  immediately  pass  this  bill— with 
its  conceded  defects — exactly  as  it  came  from  the  House,  regard- 
less of  the  embarrassments  to  the  Government  which  it  might 
hereafter  create. 

With  them  a  surplus  or  deficiency  was  an  entirely  immaterial 
cons. deration. 

The  Senate  Finance  Committee,  realizing  the  insufficiency  or 
inadequacy  of  this  bill,  proceeded  to  amend  it  by  making  provi- 
sion for  additional  revenue.  The  able  chairman  of  that  com- 
mittee, in  his  recent  speech,  said: 

The  criticisms  which  assailed  the  bill  as  it  came  from  the  House  because  it 
created  a  d«>lci«ncy  in.  the  Treasury  no  longer  apply.  We  present  a  measure 
full  freighted  with  revenue  for  every  call  th-vt  can  be  made  on  the  Republic 
at  horn j  an  1  abroad,  and  with  a  surplus  besides  of  $29,389,245. 

According  to  this  statement  the  bill  has  "  jumped  out  of  the 
frying  pan  into  the  fire.''  From  a  deficiency  there  has  arisen  an 
immoderate  surplus.  One  extreme  has  been  succeeded  by  an- 
other. The  committee  made  many  changes,  taking  sugar,  iron, 
coal,  lead,  and  other  articles  from  the  free  listand  making  them 
dutiable,  and  providing  for  a  tax  upon  sugar  estimated  by  offi- 
cial experts  to  realize  $41,822,02  J.til,  and  an  additional  tax  on 
spirits  from  which  $10,000, 003  is  anticipated.  Yet,  notwithstand- 
ing these  large  additionsof  re  venue  sources  to  the  bill,  the  com- 
mittee still  retained  the  income  tax. 

Let  us  see  how  the  figures  now  stand.  Secretary  Carlisle's 
estimate  in  his  annual  report  was  as  follows: 

Expenditures. 

Civil  and  miscellaneous $86.795.460.92 

War 47,173.203.05 

Navy 27.875,914.02 

Indians 6,931. 156.61 

Pensions 162,631,^70. 00 

Interest    26,500,000.00 

Postal  service,  etc 90,399,485.33 


Total 448,306,789.93 

Here  are  the  revenues  expected  to  be  realized  under  this  bill: 
Receiptt. 

Internal  revenue  (under  existing  laws)  $160,000.000.00 

Postal  (under  existing  laws i    84.427,766.00 

Miscellaneous  (under  existing  laws) *. 20,000,000.00 

Customs  under  pending  bill  as  estimated  by  Treasury  ex- 
perts, inclu  lintf  $11. 822. 631.61  for  sugar  duties 163,331,000.00 

Additional  internal  revenue  to  pending  bill,  as  follows: 

Income  tax  .  30, 000  003  00 

Spirit* 20.000.000.00 

Cards    .  3,000,000.00 


31 

Summary  statement 

Receipts  M80, 788, ',•66.  OO 

Expenditures 448,306.789.00 

Balance 32,481,977.00 

These  figures  thus  show  an  excess  of  revenue  over  expendi- 
tures of  $;2,-HI,!)77,  being  $3,092,7  52  larger  surplus  than  admit- 
ted in  Senator  VOORHEES'S  unofficial  statement. 

They  establish  the  fact  that  the  proposed  income  tax,  esti- 
mated at  $30,000,000,  is  not  required  for  any  legitimate  purposes 
of  the  Government. 

An  amendment  to  the  bill  striking  out  that  tax  would  still 
leave  a  surplus  of  82,481,977. 

Besides,  it  is  now  apparent  that  the  estimate  of  $162,631.570 
for  pensions  contained  in  Mr.  Carlisle's  report  was  inaccurate, 
and  may  be  safely  reduced  to  $140,000,000  or  $145,000,000.  Sen- 
ator VOORHEES'S  speech  virtually  concedes  as  much,  and  his 
own  statement  of  the  sum  required  reduces  the  amount  to  $145,- 
000,000  i  see  CONGRESSIONAL,  RECORD,  volume  26,  No.  92.  page 
4157),  being $17, 631, 570  less  than  previous  estimates,  which  sum 
added  to  the  $32,481,977  surplus  before  mentioned  makes  a  total 
surplus  of  $50,113,547  under  this  bill  as  amended  by  the  Finance 
Committee. 

Upon  reflection  it  may  be  confidently  asserted  that  the  pension 
expenditure  for  the  next  fiscal  year  will  not  exceed  $140,000,000, 
as  there  has  been  a  steady  decrease  of  late  under  the  present 
vigilant  administration  of  "bur  pension  laws.  The  expenditures 
for  the  first  nine  months  of  the  present  year  have  been  only 
$107, 151, 496,  and  at  that  rate  for  the  remaining  three  months  the 
amount  for  the  whole  year  will  be  only  $142,858,661.  A  conserv- 
ative estimate,  therefore,  would  deduct  the  further  sum  of  $5,000,- 
OiX)  (over  and  above  the  $17,631,570  previously  deducted)  from 
the  amount  originally  announced,  which  should  be  added  to  the 
surplus  already  assured  ($50,113,547),  making  a  grand  total  of 
$55,113,547.  Mr.  Edward  Atkinson  estimates  that  the  amount 
required  for  pensions  for  1894-'95  will  not  exceed  $135,000,000. 

The  situation,  then,  may  be  summarized  as  follows: 

Receipts  under  Senate  bill $480,788.766.00 

Expenditures  for  nscal  year  1895 425,675,219.00 

Total  surplus 55,113,547.00 

Deduct  income  tax 30,000,000.00 

Surplus  without  income  tax 22, 113,547.00 

If  Mr.  Atkinson  is  correct,  then,  $5,000,000  more  may  be 
added  to  this  surplus. 

Two  points  should  not  be  overlooked  bearing  upon  the  ques- 
tion of  increased  revenues:  First,  that  under  these  figures  no  al- 
lowance has  been  made  for  the  possibility  of  increased  importa- 
tions under  reduced  duties:  second,  no  allowance  has  been  made 
for  the  probability  of  such  increase  under  anticipated  revived 
conditions  of  trade.  Neither  of  these  important  considerations 
can  well  be  ignored. 

The  estimates  of  importations  anticipated  under  this  bill  are 
based  upon  the  actual  importations  during  the  last  complete 
fiscal  year  ending  June  30. 1893.  The  extreme  duties  imposed 
under  the  existing  McKinley  law  during  that  year  are  alleged 
to  have  largely  prevented  importations  which  would  otherwise 
have  been  received  or  at  least  been  possible  under  lower  duties. 

1228 


Of  course,  enormous  duties — oftentimes  styled  prohibitory  du- 
ties— tend  to  prevent  importations,  while  experience  has  shown 
that  frequently  the  imposition  of  lower  duties  has  increased  the 
revenues  by  materially  increasing  the  importations. 

Commercial  depression  naturally  diminishes  importations,  as 
it  blocks  the  wheels  of  trade  and  invites  economies  of  every 
character.  The  latter  half  of  the  fiscal  year  1892-'93  was  largely 
affected  by  the  monetary  panic,  and  it  is  not  unreasonable  to  be- 
lieve th  it  the  business  disturbances  incident  thereto  may  h  ive 
materially  diminished  the  importations  from  what  they  other- 
wise would  likely  have  been. 

No  official  nor  semiofficial  estimates  have  been  furnished  us  — 
nor  have  I  undertaken  to  make  any  figures  at  this  time — of  the 
increased  revenues  which  may  reasonably  be  anticipated  under 
this  bill,  as  now  amended,  on  account  of  the  two  considerations 
which  I  have  mentioned.  It  is  sufficient,  however,  to  declare 
that  large  increases  of  revenue  are  probable,  which  will  swell 
the  surplus  to  huge  proportions  if  the  income  tax  or  the  sugar  tax 
shall  still  be  retained.  Neither  have  I  ventured  to  consider  the 
economies  and  reforms  which  are  likaly  to  be  instituted  in  the 
various  departments  of  the  Government,  and  which  are  always 
probable  under  a  Democratic  Administration,  from  which  large 
reductions  in  expenditures  may  be  expected. 

Mr.  President,  these  figures  which  I  have  submitted  speak  for 
them-el  ves.  They  demonstrate  that  the  only  plausible  ground 
upon  which  the  income  tax  was  first  sought  to  be  imposed,  to 
wit,  that  it  was  actually  needed  to  meet  the  necessities  of  the 
Government,  has  been  thoroughly  exploded. 

This  is  not  my  individual  conclusion  alone.  The  country  so 
regards  it. 

Mr.  Edward  Atkinson,  of  Massachusetts,  a  distinguished  polit- 
ical economist,  in  a  recent  article  to  the  Boston  Herald,  in  speak- 
ing of  the  Senate  amendments  to  this  bill  says: 

The  pretext  that  an  income  tax  may  be  needed  to  cover  a  deficiency  that 
would  otherwise  occur,  therefore,  falls  to  the  ground. 

Concerning  this  tax,  he  then  adds  that — 

Economically  considered,  I  deem  it  a  war  tax  of  last  resort?vrhen  all  the 
other  sources  have  failed. 

If  in  the  face  of  these  facts — if  in  the  light  of  these  figures — 
if  in  spite  of  the  honest  and  sincere  opposition  which  this  tax 
naturally  engenders  from  the  people  of  that  great  section  of  the 
country  which  I  have  the  honor  in  part  to  represent  on  this 
floor — a  people  as  patriotic,  as  loyal,  as  generous,  and  as  philan- 
thropic as  those  of  any  other  section,  I  repeat  if  notwithstand- 
ing these  things  which  ought  surely  in  common  fairness  to  lead 
to  the  elimination  of  this  obnoxious  feature  of  this  bill,  its  re- 
tention shall  still  be  insisted  upon  by  the  unwise  and  misguided 
and  assumed  champions  of  tariff  reform  in  this  Congress,  and 
defeat  shall  await  the  whole  bill,  let  the  responsibility  fall  upon 
the  heads  of  those  where  it  properly  belongs. 

•  A  DEFKNSB  OF  NEW  YORK'S  BUSINESS  MHtf. 

I  listened  the  other  day  with  considerable  interest  to  the  dis- 
tinguished Senator  from  Indiana  in  his  fierce  denunciations  of 
the  people  in  this  country  who  have  been  fortunate  enough  to 
accumulate  a  competence.  He  nearly  exhausted  the  vocabulary 
of  abuse  in  the  anathemas  which  he  hurled  against  them. 

He  rebuked  their  "  narrow  and  corroding  selfishness,"  their 

1228 


33 

"dangerous  pretensions  and  intolerable  arrogance;"  he  described 
their  "  brutal  dictation:"  he  upbraided  "  their  unjust,  relentless, 
unsparing,  and  insolent "  conduct;  he  pictured  their  wealth  as 
the  '•  illegitimate  offspring  of  governmental  paternalism,"  and 
characterized  them  as  without  "gratitude  or  love  of  country;" 
he  imputed  to  them  an  intention  and  willingness  to  commit  per- 
jury and  other  crimes  "for  which  the  convict  stripes  of  the  peni- 
tentiary are  the  only  punishment/'  and  then  having  summarily 
adjudged  them  guilty  without  court  or  jury  he  declares  them 
to  be  '•  fit  associates  for  thieves,  housebreakers,  forgers,  and  cut- 
throats." and  not  satisfied  with  this  terrible  humiliation  which 
he  inflicted  upon  them,  and  notwithstanding  his  well-known 
amiable  and  forgiving  disposition,  with  one  fell  swoop  he  con- 
signed them  all  "  to  everlasting  hell." 

Then,  Mr.  President,  he  calmly  and  seriously  said  to  us,  "I 
am  loth  to  say  these  things."  He  need  not  have  given  us  that 
assurance:  of  course,  we  all  keenly  realized  it.  We  knew  with 
what  reluctance  he  assumed  his  unpleasant  task,  and  with  what 
lack  of  eagerness  he  embraced  the  afforded  opportunity.  Mr. 
President,  these  violent  and  unseemly  denunciations— these 
arguments,  if  they  can  be  dignified  as  such — may  answer  for  the 
hustings  of  Indiana,  but  I  regret  to  hear  them  in  the  Senate  of 
the  United  States. 

Notwithstanding  this  terrible  arraignment  of  the  men  of 
wealth,  to  which  I  have  briefly  alluded,  I  venture  to  speak  a 
few  words  in  their  defense.  I  speak  more  especially  of  the  men 
of  means  of  my  own  State.  I  can  not,  of  course,  speak  for  those 
of  Indiana — they  may  be  all  that  they  are  painted  by  the  senior 
Senator  from  that  State.  While,  however,  I  doubt  that  fact,  I 
have  such  respect  for  him  and  his  statements  that  I  can  not 
safely  contradict  him.  The  men  of  wealth  of  New  York,  as  a 
general  rule,  are  among  our  best,  most  esteemed,  and  reputable 
citizens.  They  are  not  the  vile  rascals  they  have  been  depicted, 
and  their  riches  have  not  been  acquired  by  questionable  means, 
governmental  favors,  usury,  nor  extortion. 

Some  inherited  their  wealth  from  honorable  ancestors,  others 
obtained  it  by  fortunate  investments:  others  by  great  business 
ability,  tremendous  industry,  and  remarkable  sagacity.  They 
have  largely  contributed  to  the  greatness  and  glory  of  the 
State,  building  up  its  industries,  augmenting  its  commercial 
supremacy,  sustaining  its  finances,  and  assisting  its  great  and 
varied  undertakings. 

The  strong  and  solid  financial  institutions  which  they  control, 
the  great  life  and  fire  insurance  companies  which  they  manage, 
the  admirable  loan  and  trust  associations  which  they  direct,  the 
magnificent  lines  of  railroads  which  they  operate,  not  only  in 
New  York,  but  elsewhere,  the  splendid  manufactories  which  they 
conduct,  wherein  tens  of  thousands  of  working  men  and  women 
are  employed  in  honest  labor,  the  immense  shipping  interests 
which  they  represent,  the  tremendous  wholesale  and  retail  es- 
tablishments of  trade  which  they  maintain,  and  the  hundreds  of 
other  business  enterprises  of  vast  magnitude  which  they  honor- 
ably and  successfully  manage,  are  the  evidences  of  their  ability, 
their  genius,  their  prudence,  and  their  integrity. 

The  institutions  of  learning  which  they  have  founded,  of 
which  Cornell  University,  Vassar  College,  Cooper  Institute, 
Vanderbilt  University  are  conspicuous  instances;  the  public  li- 
braries which  they  have  endowed,  of  which  the  Astor  Library, 
1228 3 


34 

the  Lenox  Library,  the  Tilden  Library  are  notable  examples: 
the  free  hospitals  which  they  have  instituted,  of  which  the 
Roosevelt  Hospital,  the  Arnot-Ogden  Hospital,  and  scores  of 
others  throughout  my  State  which  do  not  now  occur  to  me — all 
these  benefactions  attest  their  widespread  and  noble  generosity, 
and  disprove  the  contemptible  charge  of  their  supreme  il  self- 
ishness." 

Whenever  famine,  pestilence,  or  fire  has  afflicted  their  coun- 
trymen in  any  locality  or  section  of  the  Union,  the  wealthy 
business  men  of  New  York  always  speedily  came  to  the  rescue 
and  liberally  responded. 

In  great  political  campaigns,  when  the  life  of  political  parties 
has  been  deemed  to  be  at  stake,  even  Indiana  and  some  portions 
of  the  South  have  not  refused  assistance  from  the  wealthy  par- 
tisans of  New  York. 

When  the  nation's  credit  is  in  peril  and  funds  are  needed  to 
meet  the  daily  wants  of  its  Treasury,  and  it  must  borrow  from 
its  citizens,  where  else  except  to  the  bankers  of  New  York  does 
your  Secretary  of  the  Treasury  with  confidence  apply? 

When  the  country's  very  life  was  in  danger,  when  the  fate  of 
the  Government  hung  trembling  in  the  balance,  when  money 
was  sorely  needed  to  defend  the  Union,  what  subscribers  to  the 
nation's  securities  more  quickly  and  cheerfully  responded  in  the 
hour  of  emergency  than  the  moneyed  men  of  my  State? 

Mr.  President,  I  need  say  no  more.  This  speaking  in  defense 
of  wealth  is  a  new  role  to  me.  The  record  of  my  official  life 
shows  that  my  public  utterances  as  well  as  services  have  usually 
been  in  other  directions — in  defense  of  the  poor,  in  vindication 
of  the  oppressed,  and  for  the  amelioration  of  labor.  I  h  ive  no 
entangling  alliances  nor  particular  sympathies  with  tho^e  at 
whom  this  income-tax  scheme  is  principally  aimed:  they  have 
never  been  any  especial  friends  of  mine.  But  I  trust  that  I  am 
fair-minded  and  broad-minded  enough  to  defend  any  class  of  my 
fellou'-citizens — rich  or  poor,  high  or  low,  white  or  black,  native 
or  naturalized— whose  fair  fain  •  is  unjustly  assailed,  or  whose 
rights  are  threatened,  and  whose  interests  are  endangered  by 
what  I  believe  to  be  hostile  and  vicious  legislation. 

I  have  yet  to  learn  that  poverty  is  a  cardinal  virtue  and  that 
wealth  is  an  abominable  crime.  All  classes  have  their  rights, 
and  one  class  must  not  be  permitted  to  encroach  upon  the  other. 
The  demagogue  who  seeks  to  stir  up  class  prejudices  and  class 
resentments  in  order  to  win  the  gratitude  or  the  applause  of  the 
mischievous  and  the  unthinking,  who  are  essentially  his  dupes, 
deserves  only  execrations  at  the  hands  of  all  right-minded  men. 

THE  TILDEN  INCOME-TAX  CASK. 

A  momentsince  I  mentioned  the  Tilden  library.  This  reminds 
me  of  the  fact  that  the  distinguished  citizen  and  Democrat — 
whose  memory  we  all  revere — Samuel  J.  Tilden,  one  of  the 
wealthy  men  of  New  York  who  generously  donated  his  millions 
to  the  establishment  of  a  great  free  public  library— a  portion  of 
which  fund,  however,  it  was  only  deprived  through  the  techni- 
calities of  the  law — was  hi7nself  the  victim  of  the  injustice,  the 
oppression,  and  the  persecution  p  jrmissible  under  an  income  tax. 

We  have  not  forgotten  the  annoy  tnces  to  which  this  vener- 
able apostle  of  Democracy  was  subjected,  the  opprobrium  which 
he  endured,  the  bitter  litigations  and  prosecutions  which  he 
encountered  at  the  hands  of  a  few  unscrupulous  political  oppo- 
nents vested  with  a  little  brief  authority,  in  their  pretended  en- 

1228 


35  A     000611306 


foreement  of  the  law,  endangering  his  feeble  health  and  embit- 
tering his  old  age. 

It  was  not  enough  that  he  had  been  deprived  of  the  Presi- 
dency, to  which  a  majority  of  a  quarter  of  a  million  of  the  popu- 
lar vote  had  desired  to  elevate  him — deprived  because  of  the 
crimes  of  fraudulent  and  purchased  returning  boards  in  three 
States,  but  he  must  be  branded  and  denounced  as  a  wealthy  and 
selfish  politician  seeking  to  fraudulently  evade  the  payment  of 
his  just  share  of  governmental  taxation. 

And  now.  withinless  than  ten  yearsafter  his  lamented  death,  we 
are  told  by  these  new  apostles  of  Democracy  that  this  Populist 
rider  to  a  revenue  tariff  bill,  with  all  the  enormities  and  inquisito- 
rial features  which  pertain  to  it,  is  the  very  quintessence  of 
modern  Democracy,  and  without  which  all  else  is  valueless. 

THE  TRUE  ENEMIES  OF  TARIFF  REFORM. 

The  enemies  of  tariff  reform  are  those  who  imperil  the  pas- 
sage of  this  bill  by  arbitrarily  insisting  upon  the  retention  of  an 
income  tax  therein.  They  refuse  to  present  a  separate  measure 
embracing  this  feature.  They  even  decline  to  fix  any  date— one, 
two,  or  three  years— when  the  income  tax  shall  cease,  but  they 
seek  to  incorporate  and  establish  it  as  a  permanent  policy  of  the 
Government. 

They  shut  their  eyes  to  the  fact  thatabeliever  in  tariff  reform 
is  not  necessarily  a  believer  in  an  income  tax.  A  tariff  tax  is 
altogether  a  different  matter  from  an  income  tax.  They  are 
neither  identical,  homogeneous,  nor  consistent  with  each  other. 
Tariff  reform  means  tariff  reduction — not  tariff  extinction  nor 
direct  nor  internal  taxation.  These  widely  divergent  methods 
should  not  be  confused  nor  conglomerated.  The  first  notable 
effort  for  tariff  reform  since  the  war  was  embodied  in  the  Mor- 
rison bill;  but  th.ere  was  no  suggestion  of  an  income  tax. 

Then  came  the  famous  tariff  message  of  President  Cleveland, 
which  simply  invited  a  reduction  of  tariff  duties  to  prevent  a 
further  surplus,  but  there  was  no  recommendation  for  the  res- 
toration of  war  taxes,  to  wit,  taxes  upon  incomes.  Then  fol- 
lowed the  Mills  bill,  which  passed  a  Democratic  House  of  Rep- 
resentatives, and  was  distinctly  approved  by  the  national  Dem- 
ocratic convention  of  1S8S,  but  nothing  was  heard  of  any  income 
tax.  But  now  at  this  late  day,  after  a  third  party  has  adopted 
it  as  its  shibboleth,  we  are  told  that  it  is  the  sine  qua  non  of  tar- 
iff reform  and  true  Democracy.  I  deny  the  right  of  any  man, 
without  the  sanction  of  a  national  convention,  to  add  this  new 
tenet  to  the  Democratic  faith. 

OUR  DUTY. 

Mr.  President,  I  do  not  need  to  be  reminded  that  it  is  the  duty 
of  the  present  Congress  to  revise  the  tariff.  I  appreciate  tha't 
fact  as  keenly  as  any  Senator  here.  We  are  pledged  to  that 
course;  the  country  expects  it.  We  are  pledged  to  a  tariff  for 
revenue:  we  are  not  pledged  to  pass  an  income  tax.  We  are 
pledged  to  pass  a  tariff  measure  which  will  produce  sufficient 
revenue  for  the  support  of  the  Government,  not  one  insufficient 
for  riLat  purpose. 

Vre  have  no  moral  right  to  deliberately  discard  seventy-six 
millions  of  tariff  revenue  and  thereby  create  a  deficiency  to  be 
supplied  by  other  and  more  objectionable  taxation.  That  is  not 
reform:  it  is  folly,  it  is  impotency,  it  is  scarcely  less  than  crim- 
inal under  the  existing  conditions  of  the  country.  It  is  experi- 

1288 


36 

menting  with  and  hazarding  all  our  vast  and  varied  business 
interests  now  demanding  our  watchful  care. 

MY  POSITION  BRIEFLY  STATED. 

I  stand  ready  to  support  any  reasonable  measure  for  tariff  re- 
form framed  within  the  lines  and  based  upon  the  principles  which 
I  have  here  partially  indicated,  and  which  were  fully  set  forth 
in  my  speech  in  opening  the  political  campaign  in  Brooklyn  on 
September  19.  189J.  I  stand  to-day  where  I  stood  then.  I  have 
nothing  to  add  and  nothing  to  retract. 

I  will  cheerfully  vote  for  the  Mills  bill,  and  join  with  you  in 
making  many  material  reductions  of  duties  therein.  I  am  ready 
to  waive  all  minor  differences  of  details  which  do  not  involve  a 
question  of  principle. 

Having  spoken  to-day  especially  upon  the  income-tax  feature 
of  this  bill,  1  reserve  the  expression  of  my  views  upon  its  other 
features  until  near  the  close  of  the  discussion. 

CONCLUSION. 

Mr.  President,  this  is  an  important  crisis  in  the  history  of  the 
Democratic  party.  The  failure  of  tariff  revision  at  this  time 
means  the  defeat,  the  demoralization,  if  not  the  division  and  anni- 
hilation of  our  party.  Moreover,  it  means,  as  we  believe,  injury 
to  the  best  interests  of  the  country.  Let  tbose  who  insist  upon 
injecting  into  this  bill  this  odious  and  un- Democratic  feature  of 
an  income  tax  —a  relic  of  war  legislation — pause  and  reflect  upon 
the  possible  consequences  of  their  unwarrantable  demands. 

They  should  realize  that  it  means  the  loss  of  the  control  of 
this  Senate, -now  nearly  equally  divided  between  the  two  great 
parties;  it  means  the  loss  of  the  next  House  of  Representatives: 
it  means  the  loss  of  the  electoral  votes  of  New  York,  New  Jer- 
sey, Connecticut,  and  probably  every  Northern  State;  and  finally, 
it  means  the  loss  of  the  next  Presidency  and  all  that  it  implies. 
They  should  recollect  that  this  income-tax  feature  is  justly  re- 
garded in  New  York  and  many  other  Northern  States  as  a 
scheme  of  spoliation,  an  unwarranted  sectional  attack  upon 
their  citizens  of  means. 

They  should  consider  whether  there  is  anything  about  an  in- 
come tax  so  sacred,  so  desirable,  so  popular,  so  just,  and  so  de- 
fensible that  its  maintenance  is  worth  the  risk  which  they  are 
precipitating.  Let  them  remember  I860  and  the  ultra  demands 
then  made  upon  the  Democratic  party,  to  which  it  could  ncri  hon- 
orably accede;  demands  which  led  to  our  division  and  defeat;  let 
them  remember  the  triumphs  of  our  opponents,  the  civil  war  that 
followed,  the  devastation,  the  suffering,  the  humiliation  which 
ensued,  the  military  and  carpet-bag  governments  which  flour- 
ished, the  force  bills  which  threatened,  and  all  the  incidents  of 
the  terrible  years  which  darkened  our  party's  and  our  country's 
history  from  1860  to  1884,  when,  through  wiser  counsels,  moder- 
ate action,  conciliatory  methods,  and  restored  confidence,  we 
were  intrusted  with  power  again;  and,  reflecting  upon  all  these 
things,  let  them  say  whether  it  is  the  part  of  wisdom,  by  the  in- 
sistence upon  extreme  demands,  to  imperil  the  success  o  our 
party  again,  and  thereby  tend  to  retard  the  progress,  diiJ"  uisli 
the  glory,  and  endanger  the  best  and  highest  interests  of  our 
common  country. 
1228 

O 


